IIT Investrust Limited

DIRECTORS' REPORT

To,

Members,

Source Natural Foods and Herbal Supplements Limited. Bangalore

1.Your Directors are pleased to present 20th Annual Report of the Company together with Audited Balance Sheet and Profit and Loss Account for the year ended 31st March 2015.

2. OPERATIONS:

The Total revenue of the Company for the year ended 31st March, 2015 was Rs. 654.43

Lakhs which has increased approximately by 43.79% from the Total revenue of the previous year which was Rs. 455.12 Lakhs. The increase in revenue is due to the expansion in the sales of flagship products of the Company. The Company has made an additional investment of Rs. 25.53 Lakhs in the plant & Equipment and Rs. 7.77 Lakhs towards Building. The Net Profit of the Company during the financial year under review is Rs. 15.79 Lakhs as compared to 17.23 Lakhs during the previous year. The Company spent Rs. 34.43 Lakhs more than the previous year on augmenting the Marketing team and Rs.37.42 Lakhs over brand building of the Products.

Since these expenses will derive profits eventually in the future years, your company is confident of performing better in the coming years.

3. FUTURE OUTLOOK:

Company's vision is to make the Ayurveda reach the masses across the globe. Your Company focuses on such products which will bring Ayurveda in to an individual's daily diet. Company manufactures various Ayurvedic products in the form of medicines and herbal supplements.

The Company intends to focus and increase the market share of its products by increase the products range.

4. DIVIDEND:

In order to conserve the meagre resources for future growth, your Directors do not recommend any Dividend for the financial year ended 31.03.2015.

5. DIRECTORS:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Arvind Varchaswi N, Managing Director retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Chandrakant L Rathi, Independent Director of the Company was appointed on 12th November, 2010. As per the provisions of Section 149 of the Companies Act, 2013, he is eligible for appointment as Independent Director for a term of five years.

The Board recommends his appointment as Independent Director for a period of five years.

The profile Mr. Chandrakant L Rathi are given elsewhere in the Annual Report.

6. AUDITORS:

M/s. Vijay Narayan & Co., Chartered Accountants were appointed as the Statutory Auditors of the Company at 19th Annual General Meeting of the Company held on 15th September, 2014 to hold office until the conclusion of the Annual General Meeting of the Company to be held during the year 2017 subject to the ratification of members at every Annual General Meeting.

In view of the above, necessary Resolution is proposed to be passed at the 20fhAnnual General Meeting ratifying the appointment of M/s. Vijay Narayan & Co., Chartered Accountants as the Statutory Auditors of the Company from the conclusion of the 20th Annual General Meeting of the Company until the conclusion the next Annual General Meeting of the Company

The Statutory Auditor's Report for the financial year 2014-15 does not contain any qualification, reservation or adverse remarks and therefore does not require any comments from the Directors.

7. FIXED DEPOSITS:

Your Company has not accepted any Fixed Deposits from the Public within the meaning of Section 73 to 76 of the Companies Act, 2013, during the year under review.

8. DIRECTORS' RESPONSD3DUTY STATEMENT:

Pursuant to the provisions under Section 134(5) of the Companies Act, 2013, with, respect to Directors' Responsibility Statement, the Directors confirm:

a. That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same;

b. That they have selected such accounting policies and applied them consistently, and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c. That they have 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. That they have prepared the annual accounts on a going concern basis;

e. That they have 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. That they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

9. CHANGE IN THE NATURE OF BUSINESS:

There is no change in the nature of business of the Company during the year.

10. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate on the date of this report.

11. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

The Board has appointed Mr. Ajay S Shrivastava, Company Secretary in whole time practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2014-15. The report of the Secretarial Auditor is annexed to this report as Annexure-1.

The Secretarial Auditor has observed that the Company has not complied with the provisions stated in Section 203 of the Companies Act, 2013 with regard to appointment of the Chief Financial Officer (CFO) during the Audit period.

In this connection the explanation of the Board is as follows:

The Company after incurring losses has now entered into revival stage and has started earning profits.

The Paid-up Share Capital of the Company is less than Rs. 10.00 crores and it has already appointed other Key Managerial Personnel. However appointment of Chief Financial Officer will also be completed at the earliest.

12. EXTRACT OF ANNUAL RETURN:

Pursuant to the Section 92(3) of the Companies Act, 2013 extract of the Annual Return is annexed to this report as Annexure-2

13. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report pursuant to the Corporate Governance Clause of the Listing Agreement is annexed to this report as Annexure- 3

14. CORPORATE GOVERNANCE REPORT:

The Report on Corporate Governance as per Clause 49 of the Listing Agreement is attached herewith as Annexure-4 which forms a part this report. The Compliance Certificate on Corporate Governance received from the Statutory Auditors is also given as an Annexure to this report.

15. PARTICULARS OF REMUNERATION TO DIRECTORS / KMP / EMPLOYEES:

There were no employees during the year 2014-15 covered under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as 'Annexure- 5 which forms part of this report.

16. POLICY ON DIRECTORS APPOINTMENT, ANNUAL PERFOMANCE EVALUATION OF THE BOARD AND POLICY ON REMUNERATION:

Pursuant to the requirement under Section 134(3)(e) and Section 178(3) of the Companies Act, 2013, the policy on appointment of Board members including criteria for determining qualification, positive attributes, independence of a director and the policy on remuneration of Directors, KMP and other employees is attached as Annexure- 6 respectively, which forms part of this report.

17. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW:

The Company conducted five Board meetings during the financial year under review. The Board Meetings were held on 26.05.2014, 04.08.2014, 14.08.2014, 13.11.2014, 14.02.2015.

18. DECLARATION OF INDEPENDENT DHtECTORS:

The Directors of the Company have given the Declaration pursuant to the provisions of Section 149 of the Companies Act, 2013.

19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Pursuant to the provisions of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014, the details of conservation of energy and technology absorption and Foreign exchange earnings and outgo are attached as Annexure- 7

20. RESEARCH AND DEVELOPMENT:

Research & Development is a core activity in any medical /nutraceuticals industry. Your Company is currently involved in carrying out various Research & Development to bring more herbal and organic products in to the existing / new product portfolio and to add more value to the existing products. The Company is also emphasizing on organic food and nutritional supplements with an optimum mix of naturally available ingredients for attaining a sustainable improvement in the Health of all age Groups.

21. LISTING:

The shares of your Company are listed in the BSE Limited.

22. CODE OF CONDUCT:

The Company has adopted a uniform Code of Conduct for Directors, Senior Management Personnel and other Executive level officers to ensure proper ethical standards and further ensure due compliance to such established standards.

23. SUBSIDARY/ HOLDING COMPANIES

There are no subsidiaries to your Company as on the date of report. In terms of the shareholding, the Company is a subsidiary of Sumeru Ayurveda Private Limited on account of shareholding.

24. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT:

The Company has comprehensive risk assessment and minimization procedure which are reviewed by the Board.

The Company identifies risks and control systems to mitigate them are in place .In the opinion of the Board, at present there are no risks which may threaten the existence of the Company

25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the details required to be furnished herein are NIL.

26. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTDXS:

All the related party transactions are entered on arm's length basis and in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the listing agreement.

The details of the transactions with related parties are provided in the Notes to the financial statements

27. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS:

The Company has in place adequate internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable material weakness in the design or operation were observed.

28. THE DETAILS OF DHtECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR:

There are no appointments or resignations of directors or Key Managerial Personnel during the year.

29. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM:

The Company has established a vigil machanism which is overseen through the Audit Committee. The Audit Committee Chairman has been appointed as the Ombudsman of Vigil machanism. Adequate safeguards agaisnt victimization of employees and Directors who express their concerns, forms part of the mechanism. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The policy is available on the website of the Company.

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

During the year no company has become or ceased to be a subsidiary or joint venture or associate company of Company.

31. ACKNOWLEDGEMENTS:

Your Directors take this opportunity to express their gratitude for continuous support and co-operation extended by Government Authorities, Bankers and other business associates along with our esteemed Shareholders and employees.

On Behalf of the Board

Arvind Varchaswi N. Managing Director DIN: 00143713

Nikhil Sen Director DIN: 00842114

Place: Bangalore

Date: 12th August, 2015