ADF Foods Ltd.
|BSE: 519183||Sector: Agri and agri inputs|
|NSE: ADFFOODS||ISIN Code: INE982B01019|
|BSE LIVE 15:29 | 28 Apr||217.25||
|NSE 15:51 | 28 Apr||217.50||
|Mkt Cap.(Rs cr)||460.57|
|Mkt Cap.(Rs cr)||460.57|
ADF Foods Ltd. (ADFFOODS) - Director Report
Company director report
ADF Foods Limited
Your Directors have pleasure in presenting the Twenty Sixth Annual Report together withthe Audited Financial Statements for the Financial Year ended 31st March 2016.
A. FINANCIAL RESULTS
The performance of the Company for the financial year ended 31st March 2016is summarized below:
(Rs. in Lakhs)
Previous year's figures have been re-grouped wherever necessary
During the year under review your Company has recorded revenue from operations (net)of Rs. 160.59 Crore as against. Rs. 149.45 Crore in the previous year. The Net profit(after tax and extra ordinary items) for the financial year ended 31st March2016 was Rs.14.10 Crore as against Rs. 14.60 Crore during the previous year.
Your Company has recorded revenue from operations (net) of Rs. 209.14 Crore as againstRs. 203.80 Crore in the previous year. The net profit (after tax and extra ordinary items)for the financial year was Rs. 6.61Crore as against Rs. 8.84 Crore during the previousyear. The reduction in net profit is mainly attributable to one time expenses incurred bythe Company's US subsidiary for shutting down its manufacturing unit and shifting tocontract packing arrangement.
B. BUSINESS DEVELOPMENT
The Domestic Market:
The Company continues to strengthen the distribution reach of ADF Soul and at the sametime focuses on brand building product and packaging innovation retail penetration andintroduction of new products to strengthen the market presence. During the year theCompany has re-launched its Instant Masala Mix range of ADF Soul products with newimproved packaging and eight exciting varients. These products are made with the goodnessof olive oil and do not contain preservatives and artificial flavours. The Company hasalso entered into smart e-distribution tie-ups for enhancing the market coverage of ADFSoul in the major cities like Mumbai Delhi Ahmedabad and Bangalore .
Going forward the Company will be working towards enhancing market share and brandreputation with significant brand and marketing spends and widening of product range inthe coming years driven by changing consumption patterns and evolving consumer needs.
US business :
The Company stopped its US manufacturing operations since December 2015 on account ofexpiration of the factory lease. As the cost of setting up a new manufacturing unit wouldhave required considerable investment the Company shifted to a more cost effective optionof getting the products manufactured through a contract packer. During the year underreview the Company has developed a new product category which will see launching of manyexciting products during this fiscal year.
International business :
The Company has been exporting its foods products over 45 countries across the Globe.
During the year under review the new variants were introduced under Ashoka brand inFrozen foods and ready to eat categories. The Company also introduced new range of vegan(dairy free) products in ready to eat category.
C. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments if any affecting the financial positionof the Company which have occurred between the end of the Financial year of the Company towhich the Financial Statements relate and the date of the report.
D. SHARE CAPITAL
The paid up Equity Share Capital as on March 312016 was Rs. 22 Crore. During the yearunder review the Company has not issued or allotted any securities.
In continuation of the Company's efforts to effectively utilize its surplus cash theBoard of Directors of the Company in its meeting held on 27th July 2016 hasapproved the buyback of equity shares at a price not exceeding INR 125 per equity share ofRs. 10/- each for an aggregate amount not exceeding INRI8 crore. The maximum Buyback sizewould be 9.7% of the paid up share capital and free reserves based on the auditedfinancial statements of the Company for the financial year ended March 312016 throughStock Exchange mechanism prescribed under the Securities and Exchange Board of India(Buy-back of Securities) Regulations 1998 ("Buy-back Regulations") and theCompanies Act 2013 ("Act").
The buyback would commence from August 10 2016 subject to necessary statutorycompliances and approvals. The other features of the Company's buyback offer including theproposed timetable would be available in the Public Announcement of buyback that would beuploaded on the Company's website www.adf-foods.comunder the Investors Section.
In view of the buyback The Board did not declare dividend on the equity shares of theCompany for the year under review.
G. SUBSIDIARY COMPANIES
Your Company has three subsidiaries namely ADF Foods UK Ltd Power Brands (Foods) Pvt.Ltd. and ADF Foods (India) Ltd. and two step down subsidiaries viz. ADF Holdings (USA)Ltd. and ADF Foods (USA) Ltd as on 31st March 2016.
M/s Power Brands (Foods) Pvt. Ltd 99.99% Subsidiary of the Company is undergoingVoluntary Liquidation vide Special resolution passed by the Members on 5thNovember 2012.
Shareholders interested in obtaining a copy of the audited annual accounts of thesubsidiary companies may write to the Company Secretary.
During the year under review the Company did not have any JVs and/or Associatecompanies.
In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the financial statement of the subsidiaries are set out in the prescribed form AOC-Iwhich is attached to the financial statements.
H. BOARD OF DIRECTORS AND COMMITTEES
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr.Bhavesh R. Thakkar Director retires by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment.
During the year Mr. Ashok H. Thakkar Chairman of the Company was appointed as theWhole time Director for a period of one year from Ist October 2015 Mr. BimalR. Thakkar as the Managing Director for a period of one year from Ist October2015 and Mr. Bhavesh R. Thakkar as the Executive Director for a period of one year from IstOctober 2015.
Meetings of Board of Directors
Four meetings of the Board of Directors of the Company were held during the year. Fordetail of the meetings please refer to Clause II E of the Corporate Governance Reportwhich forms part of this Report.
Meeting of Independent Directors
During the year under review the meeting of the Independent Directors was held on 9thMarch 20I6. o Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act 20I3 and Regulation I7 of SEBI(Listing Obligations and Disclosure Requirement) Regulations 20I5 the Board has carriedout an annual performance evaluation of its own performance of its Committees and thedirectors individually.
The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.
Familiarization Program for Independent Directors
The Independent directors of the Company are eminent personalities having wideexperience in the field of business finance industry and law. Their presence on theBoard has been advantageous and fruitful in taking business decisions. IndependentDirectors are appointed as per the Governance guidelines of the Company with managementexpertise and wide range of experience. The Directors appointed by the Board are giveninduction and orientation with respect to the Company's vision strategic direction corevalues including ethics corporate governance practices financial matters and businessoperations by having one-to-one meeting with the Managing Director. The new Board membersare also requested to access the necessary documents / brochures Annual Reports andpolicies available at the Company's website www.adf-foods.comto enable them to familiarize with the Company's procedures and practices. Periodicpresentations are made by the Senior Management Statutory and Internal Auditors at theBoard/Committee meetings on business and performance updates of the Company businessrisks and its mitigation strategy impact of regulatory changes on strategy etc. Updateson relevant statutory changes encompassing important laws are regularly intimated to theIndependent directors.
Familiarization program of the Company as specified under Regulation 46 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is displayed on theCompany's website www.adf-foods.com and isavailable under the weblink:
Policy of Directors Appointment and Remuneration
In accordance with the provisions of Section 134(3) (e) of the Companies Act 2013("the Act") read with Section 178(3) of the Act and The SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has formulatedpolicy on Directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters whichis covered in the Corporate Governance Report which forms part of this Report. Furtherinformation about elements of remuneration package of individual directors is provided inthe extract of Annual Return as provided under Section 92(3) of the Act at Annexure-V inthe prescribed form MGT-9 and forms part of this Report.
Committees of the Board
The Company has duly constituted the Committees required under the Companies Act 2013read with applicable Rules made thereunder and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
The Board of Directors of the Company has formed an Audit Committee which consist ofthe Independent Directors namely Mr. Nipun C. Shah as the Chairman Mr. Yasir J. VarawalaMr. Viren Merchant & Mr. Ravinder Kumar Jain.
All the recommendations of the Audit Committee were accepted by the Board during thefinancial year under review.
The other Committees of the Board are:
i) Nomination and Remuneration Committee
ii) Stakeholders Relationship / Shareholders Grievance Committee
iii) Corporate Social Responsibility Committee
iv) Share Transfer Committee
The details with respect to the composition powers roles terms of referenceMeetings held and attendance of the members at such Meetings of the relevant Committeesare provided in the Report on Corporate Governance of the Company which forms part of thisAnnual Report.
Directors Responsibility Statement
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(5) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the financial yearended March 31 2016 the applicable accounting standards have been followed along withproper explanation relating to material departures if any;
b. that such accounting policies as mentioned in Note 2 of the Notes to the FinancialStatements have been selected and applied consistently and judgment and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company for the financial year;
c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
I. CASH FLOW STATEMENT
The Cash Flow Statement pursuant to Regulation 34(2) of SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 is annexed to this Report.
J. CONSOLIDATED ACCOUNTS
In compliance with Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and in accordance with the requirements of AccountingStandards AS-21 prescribed by the Institute of Chartered Accountants of India theConsolidated Accounts of the Company and its subsidiaries are annexed to this Report.
Report on Corporate Governance
In compliance with the requirements of Regulation 34(3) and Schedule V of SEBI (ListingObligations and Disclosure Requirement) Regulations 2015 a separate report on CorporateGovernance along with Auditors' certificate on its compliance has been provided elsewherein this Annual Report which forms part of this report.
Report on Management Discussion and Analysis is provided in separate section and formspart of this Annual Report.
Various information required to be disclosed under the Act and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is set out in the Annexure-Iand forms part of this report.
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
Vigil Mechanism/Whistle Blower Policy
The Company has adopted a Vigil Mechanism/Whistle Blower Policy' pursuant toSection 177 of the Companies Act 2014 read with Regulation 22 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with an objective to conductits affairs in a fair and transparent manner and by adopting the highest standards ofprofessionalism honesty integrity and ethical behavior.
With the adoption of this policy the Company has put in place a mechanism wherein theEmployees are free to report to the management any actual or possible violation of thePrinciples or any other unlawful or unethical or improper practice or act or activity ofthe Company. Under the Whistle Blower Policy the confidentiality of those reportingviolation(s) is protected and they are not subject to any discriminatory practices. Nopersonnel has been denied access to the Management & Audit Committee . The mechanismis reviewed by the Audit Committee of the Company in accordance with the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The Company did not receiveany such complaints during the year.
Whistle Blower Policy of the Company is displayed on the Company's website
Risk Management Framework
The Company has adopted Business Risk Management System (BRMS) for mitigating variousrisks associated and identified across all levels within the organization. This model isbased on ISO 31000. BRMS enables the management to review the business risks on periodicalbasis and to bring the high risk areas to the immediate attention of the Board.
Internal Financial Controls
Your Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. Review of the internal financial controlsenvironment of the Company was undertaken during the year under review which coveredverification of entity level control process level control and IT controlsidentification assessment and definition of key business processes and analysis of riskcontrol matrices etc. During the period under review effectiveness of internal financialcontrols was evaluated. Reasonable Financial Controls are operative for all the businessactivities of the Company and no material weakness in the design or operation of anycontrol was observed.
Other Policies under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has framed Policy fordetermination of Materiality for disclosure of events or information. The same has beenhosted on the website of the Company at the link:
The details of the other policies of the company can be obtained using the followingweblinks :
o Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
The Company has a policy on Prevention of Sexual Harassment of Women at Workplacepursuant to the provisions of The Sexual Harassment of Woman at Workplace (PreventionProhibition & Redressal) Act 2013. The Company did not receive any such complaintsduring the year.
The Prevention of Sexual Harassment Policy of the Company is displayed on the Company'swebsite www.adf-foods.com and is available underthe weblink: http://www.adf-foods.com/pdfs/Sexualharasspolicy.pdf.
L. PARTICULARS OF EMPLOYEES
Key Managerial Personnel (KMP)
Mr. Ashok H. Thakkar Chairman Mr. Bimal R. Thakkar Managing Director & CEO Mr.Bhavesh R. Thakkar Executive Director & CFO and Ms. Shalaka Ovalekar CompanySecretary & Compliance Officer are the KMPs of the Company.
During the period under review there was no change in KMPs.
There are no employees drawing remuneration exceeding the monetary ceiling of Rs. 60lakhs or more per annum (Rs. 1.02 Crores as per MCA notification no. G.S.R. 646(E) dated30th June 2016) or Rs. 5 lakhs or more per month (Rs. 8.50 Lakhs as per MCAnotification no. G.S.R. 646(E) dated 30th June 2016) during the F.Y. 2015-16if employed for a part of the year prescribed under the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
Human Resource and Employee Relations
The Company has always perceived its Manpower as its biggest strength. The emphasis wason grooming inhouse talent enabling them to take higher responsibilities. The Employeerelations continue to be cordial at all the divisions of the Company. Your Directors placeon record their deep appreciation for exemplary contribution of the employees at alllevels. Their dedicated efforts and enthusiasm have been integral to your Company's steadyperformance.
M. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The Loans Guarantees and investments covered under Section 186 of the Companies Act2013 form part of the Notes to the Financial Statements provided in this Annual Report.
N. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons subsidiary companies and other relatedparties which may have a potential conflict with the interest of the Company at large. AllRelated Party Transactions are placed before the Audit Committee and also the Board forapproval. Prior omnibus approval of the Audit Committee is obtained on yearly basis forthe transactions which are of a foreseen and repetitive nature. A statement giving detailsof all related party transactions is placed before the Audit Committee and the Board ofDirectors for their approval on a quarterly basis. The policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website.
Pursuant to requirements of Regulation 16 (1) (c) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Company has formulated a Policy ondetermining Material Subsidiaries'.
The Policy is posted on website of the Company viz; www.adf-foods.com.
The web link of the said Policy is
O. PUBLIC DEPOSITS
Your Company has not accepted any deposit within the meaning of Section 73 and 76 ofthe Companies Act 2013 and the rules made thereunder during the financial year 2015-16.
P. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant Section 205A and 205C of the Companies Act 1956) dividends pertaining to thefinancial year 2007-08 (Final) amounting to Rs. 576081/- which remained unpaid orunclaimed for a period of 7 years were transferred by the Company to the InvestorEducation and Protection Fund during the financial year under review.
Q. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
The Company has a Corporate Social Responsibility (CSR) policy and set up CSR Committeecomprising of three members viz. Mr. Viren Merchant Independent Director Mr. Nipun ShahIndependent Director and Mr. Bimal R. Thakkar Managing Director.
During the Financial Year 2015-16 the Company was required to spend an amount of Rs.64.86 Lakhs on the CSR activities (including Rs. 31.83 for Financial Year 2014-15)pursuant to Section 135 of the Companies Act 2013. During the year the Company hadundertaken various meaningful CSR activities in the areas such as education healthconstruction of toilets eradication of hunger and poverty etc. and the amount spent onthese activities was Rs. 47.62 lakhs . The Company could not spend the entire CSR Fundsduring the said year as these were allocated for the construction of a hospital floor andtoilets at Nadiad and these projects remained to be completed partially on account of nonavailability of labour. However the Company is committed to complete both these projectsin the FY 2016-17 along with other CSR activities.
The CSR Policy of the Company and the relevant report as per the Companies (CorporateSocial Responsibility Policy) Rules 2014 have been disclosed in Annexure-IV to thisReport.
R. EXTRACT OF ANNUAL RETURN
Pursuant to sub-section 3 (a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 an extract of the Annual Return as at 31st March 2016 forms partof this report as Annexure V
S. AUDITORS AND THEIR REPORT
For the financial year 2016-17 it is proposed to ratify appointment of M/s.Kalyaniwalla & Mistry Chartered Accountants Mumbai as Statutory Auditors subject toapproval of the Members in the ensuing Annual General Meeting.
The Company has received letters from the Auditors to the effect that theirre-appointment if made would be within the prescribed limits under Section I4l(3)(g) ofthe Companies Act 2013 and that they are not disqualified for re-appointment.
There are no qualifications contained in the Auditors Report and therefore there areno further explanations to be provided for in this report.
Details with respect to fraud reported by Auditors
During the year under review there was no fraud reported by Auditors. o SecretarialAudit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Keyul M. Dedhia & Associates Company Secretary in Practice (C.P No.8618) to undertake the Secretarial Audit of the Company for the Financial Year 2015-16.The Secretarial Audit Report is annexed herewith as "Annexure III". There are noqualifications contained in the said Report. However the Secretarial Auditors have statedthe following observation in their Report :
1. The Annual General Meeting of Members of the Company was duly convened onSeptember 30 2015. However the Chairman of the Audit Committee was not present at themeeting.
2. The financial statements [Standalone and Consolidated] of the Company for thefinancial year ended March 31 2015 were filed with the Registrar in Form AOC-4 as per theprovisions of Section 137 of the Companies Act 2013. However accounts of the subsidiarycompanies of the Company which have been incorporated outside India were not attachedinadvertently.
The Company's explanation to these points is as under :
I. The Audit Committee Chairman could not attend the Annual General Meeting of theCompany held on 30th September 2015 on account of serious health issues.However as permitted under Secretarial Standard 2 Mr. Viren Merchant attended the meetingas an authorized representative.
2. As the Company attached the consolidated financial statements the accounts of thesubsidiaries remained to be attached inadvertently. Henceforth the Company will do theneedful.
M/s. Suresh Gandhi & Associates Surat have been associated with the Company asInternal Auditor for Nadiad Division.
Further M/s. S M S R & Co. Chartered Accountants Mumbai have been associatedwith the Company as the Internal Auditors for Mumbai and Nasik Divisions of the Company.
The Audit Committee of the Board of Directors Statutory Auditors and the Managementare periodically apprised of the Internal Audit findings and corrective actions taken.
T. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the Financial Year under review no significant and material orders were passedby the regulators or courts or tribunals that would impact the going concern status of theCompany and its future operations.
U. LISTING OF SHARES
The Company's shares are actively traded on BSE Limited and the National Stock Exchangeof India Limited.
V. LISTING AGREEMENT
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effectivefrom December 2015. Accordingly all listed entities were required to enter into theListing Agreement with the stock exchange within six months from the effective date.Accordingly the Company entered into the Listing Agreement with BSE Limited and NationalStock Exchange of India Limited during February 2016.
W. TECHNOLOGY AND QUALITY
Your Company is committed to deliver highest quality of products by continuousimprovement in terms of product quality and achieving customer satisfaction and delight.Your Company has already obtained various quality certifications such as theinternationally recognized BRC (British Retail Consortium) Global Standard - Foods ISO22000/ HACCP & ISO 9001: 2000 certifications for its plants located at Nadiad Gujaratand Nashik Maharashtra.
X. ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information required under Section 134 (3) (m) of the Companies Act 2013 read with theRule 8 of The Companies (Accounts) Rules 2014 is appended hereto and forms part of thisreport at Annexure VII.
Your Directors wish to express their sincere appreciation of the excellent support andco-operation extended by the Company's shareholders customers bankers suppliers and allother stakeholders.
For and on Behalf of the Board of Directors
Ashok H. Thakkar Chairman DIN: 00087465
Mumbai 27th July 2016 Regd. Office :
83/86 GIDC Industrial Estate
Nadiad 387001 Gujarat Tel.: 0268-2551381/2 Fax. : 0268-2565068;
E-mail: firstname.lastname@example.org; website: