Your Directors hereby present their Annual Report together with the audited accountsof the Company for the financial year ended 31st March 2016.
1. PERFORMANCE OF THE COMPANY
Your Companys performance for the year ended 31st March 2016 is asfollows:
| || ||(Rs. Millions) |
| ||2015-16 ||2014-15 |
|Net Sales ||7801.94 ||7562.34 |
|Other Income ||20.16 ||36.41 |
|Total Income ||7822.10 ||7598.75 |
|Operating Expenses ||7252.80 ||6985.89 |
|PBDIT ||569.30 ||612.86 |
|Depreciation ||160.12 ||147.58 |
|Interest ||53.28 ||12.29 |
|Profit Before Tax (PBT) ||355.90 ||452.99 |
|Taxes ||122.31 ||80.20 |
|Profit After Tax (PAT) ||233.59 ||372.79 |
Net Sales for the year at 7801.94 MM were 3% higher than Prior Year reflectingcontinued strong growth in the Foods business which registered an increase in Net Sales of8% to reach a turnover of Rs 1713 MM. In the Edible Oils business Net Sales increased by2% with a 5% increase in turnover of Sundrop Oils offset by an 8% decline in the commodityCrystal business. Depreciation increased by 8% reflecting the absorption of a significantCapex program with Interest costs rising due to higher imports of popcorn kernels toensure input supply continuity. Effective Tax rate for FY16 at 34% was higher thanprevious year (PY) of 18% reflecting the end of Section 80IC benefits at the Kashipurfacility.
1.2 Key Indicators
| || ||(Rs. Millions) |
| ||2015-16 ||2014-15 |
|Gross Margin (GM) ||1826.48 ||1897.64 |
|GM % ||23.4% ||25.1% |
|Advertising & Sales Promotion ||426.50 ||443.89 |
|A&P % ||5.5% ||5.9% |
Gross Margin % was lower than PY by 170 basis points reflecting 3 key investments madeby the Company to drive Growth (a) Absorption of higher Manufacturing Costs as aconsequence of a significant Capex program over the period FY14 to FY16 (b)Distributor support investments for higher delivery costs incurred for an additional 200Company Salesmen (c) Improvement in value proposition despite higher corn costs forcontinued volume growth in the Snacks category. A&P spend was lower by 40 basis pointsreflecting the choice made by the Company to increase investments in Distribution throughhigher Company Salesmen and Distributor Support mechanisms translating into an additional100 basis points of investment in Distribution.
Given the continued strong performance of the Company your Directors are pleased torecommend a Dividend of Rs. 2/- per equity share of the face value of Rs. 10/- each forthe period ended 31st March 2016 subject to the approval of the share holdersat the Annual General Meeting to be held on 27th July 2016.
| || ||(Rs. Millions) |
| ||2015-16 ||2014-15 |
|Profit after Tax ||233.59 ||372.79 |
|Profit brought forward from ||2041.97 ||1727.84 |
|Previous year || || |
|Surplus available for ||2275.56 ||2100.63 |
|Appropriation || || |
|Transfer to General Reserve ||- ||- |
|Proposed Dividend for the Financial year at the rate of Rs. 2/- each* (previous year Rs. 2/-) ||- ||48.74 |
|Tax on Proposed Dividend ||- ||9.92 |
|Forward to the following year ||2275.56 ||2041.97 |
*Refer Note No. 2.46 in notes to accounts
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
(c) they have taken proper and sufficient care 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) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement a report on Corporate Governance along withAuditors Report on its compliance is annexed forming part of the Annual Report.
Additionally this contains compliance report signed by the CEO of the Company inconnection with compliance with the Code of Conduct and also CEO/CFO Certification asrequired by SEBI (Listing Obligations and Disclosure Requirements) 2015. In line with therequirements of new Companies Act 2013 your Company has constituted new Board Committeesand has in place all the statutory Committees required under the law. Details of BoardCommittees along with their terms of reference composition and meetings of the Board andBoard Committees held during the year are provided in the Corporate Governance Report.
5. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from members on the Annual Report and Accounts this report includesMD&A as appropriate so that duplication and overlap between the Directors Reportand a separate MD&A is avoided and the entire material is provided in a composite andcomprehensive document.
6. INDUSTRY STRUCTURE & DEVELOPMENTS
The Food industry continued to remain sluggish during FY16. However your Companyhas taken significant measures to ensure continued strong growth through a combination ofinvestments in manufacturing capacities and increased investments in distributionexpansion.
We expect to be able to continue to deliver strong growth and take advantage of thesignificant capital investments we have recently completed behind products with clearcompetitive advantage and "right to win". An improvement in the overallconsumption climate will enable us to further accelerate this growth.
7. OPPORTUNITIES AND THREATS
The Indian food industry is still at a nascent stage and we expect it to record solidgrowth rates for several years to come. This represents a significant opportunity for yourCompany given that we have already made balanced capital investments to develop aportfolio capable of delivering steady profitable growth. The continuing digitization oftodays world presents both an opportunity and a threat. An opportunity because itenables us to communicate with and deliver to consumers in a far more focused manner thanwas possible in the pre-digital age. However it is also a threat because it enablessmaller competitors to reach out to consumers in a manner not possible in the pre-digitalage because of the high costs of legacy distribution systems. We have to approach this ina nimble and balanced manner and are confident that in doing so we will be able capturethe opportunities while overcoming the threats.
8. STATE OF THE COMPANYS AFFAIRS
In FY16 Act II remained the fastest growing Snacks brand in the Modern Trade andSundrop Peanut Butter the fastest growing Spread in the Spreads Category enabling us todeliver strong growth in the Foods business of the Company.
Our strong and profitable position in both the Snacks and the Spreads categories meansthat we are well placed to seize growth opportunities in both of these categories with aportfolio which is profitable and meets emerging consumer needs.
In the last years Directors Report we had stated our intent to increaseinvestments in Distribution with the establishment of a strong portfolio. In FY16your Company increased its investment in Distribution Expansion by c Rs.80 MM or 100 basispoints of Net Sales which was largely funded by savings in administrative expenses. Thisinvestment was made with a steady build up during the year translating into an acceleratedquarter on quarter growth in our Foods business in FY16.
Your Company will continue to leverage the investments made both in portfolio expansion& distribution expansion to drive growth in both the Snacks & the Spreadscategories while maintaining a strong position in the Edible Oils category.
This will enable us to progress towards our goal of being amongst Indias"Best Performing Most Respected Foods Companies".
9. PRODUCT CATEGORIES
Your Company continued to gain share in the Rs.10000+ crore Snacks category in Indiadriven by further relevant extensions of the Act II brand and selective extension intoIndian snacks of the Sundrop brand. Act II which is now present in Ready to Cook PopcornTortilla Chips Ready to Eat Popcorn and Extruded Snacks recorded a turnover of Rs.148crore in Net Sales in FY16. In the Modern Trade Act II was the fastest growingSnack in FY16 with a value share of roughly 9% of the Category as compared to anestimated 2% share across all channels. As we expand our distribution and manufacturingfootprint we would expect to realize our fair share of the category nationally.
Success in the Snacks business requires both an expansion in distribution and anational manufacturing footprint. As stated earlier in this report we have significantlyincreased our investments in Distribution in FY16. Last year your Company alsoacquired land in both Chittoor (AP) and Kolkata (WB). Regulatory approval has already beenreceived for Chittoor where we are in the process of commencing construction. In the caseof Kolkatta we will await the necessary regulatory clearances. Together with the 4existing plants and the near completion of plant close to Guwahati will enable us to be aprofitable and strong national Snacks player.
The Rs.1000+ crore Spreads category was one of the fastest growing food categoriesnationally in India in FY16. With a 30%+ growth in Volume & Value in FY16we estimate that Sundrop Peanut Butter now has roughly 3% of the category nationally andabout 7% in the Modern Trade where it is clearly the driver of category growth.
Your Company continues to make steady investments behind the Peanut Butter business andwe feel is well positioned to seize the growth opportunities and capture our fair share ofthe Category. In FY16 the Company introduced small pack sizes to drive trial of theCategory while continuing to drive distribution. In FY17 we will continue to useinnovation to drive the Spreads category and our share within the Category.
9.3 Edible Oils & Sprays:
With a 76% share of total revenue the Edible Oils category continues to be a criticalcategory for your Company. In FY16 we recorded a steady performance on SundropEdible Oils which recorded a volume growth of 6% and a value growth of 5%. The commodityCrystal Oil which is sold largely in the states of Andhra Pradesh and Telangana howevercame under significant competitive pressure and recorded a decline of 14% in volume and 8%in value. Your Company continues to support our flagship Sundrop Heart in this Categorywith adequate level of investments to ensure that our position in this category remainshealthy and profitable while delivering the highest returns to our shareholders.
9.4 Soups Puddings & Desserts:
As stated in last years report your Company is in the process of evaluating theimpact of local production capabilities in this category. This will be undertaken alongwith alternate options for investment choices a process which is currently underway.
9.5 Meals & Meal Enhancers:
As stated in last years report your Company is in the process of assessing theimpact of local production on this category. Similar to 9.4 (above) this will beundertaken along with alternate options for investment choices a process which iscurrently underway.
10. RESEARCH QUALITY & INNOVATION (RQI)
Your Company continues to focus on innovation as a driver of growth. In FY16innovation drove the rapid growth that we saw in both the Spreads and the Bagged Snackscategories. This process will continue in FY17 in addition to which we will alsobring our innovation capabilities to test new categories.
11. CONSERVATION OF ENERGY ABSORPTION TECHNOLOGY FOREIGN EXCHANGE ANDEMPLOYEEPARTICULARS
A Statement giving details of conservation of energy technology absorption and foreignexchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts)Rules 2014 is attached as annexure and forms part of this report.
12. HUMAN RESOURCES / INDUSTRIAL RELATIONS
As a part of a Company wide program to reduce the cost of Purchased Services whileleveraging the digital world we have discontinued the use of several external measurementsystems including the use of retail audits. In the area of Human Resources we discontinuedthe use of external measurement of engagement and used available internal digital tools.Our engagement scores continue to be robust with an engagement level of 79%.
Your Company will continue to work to ensure that we have a highly engaged andproductive organization to deliver against our vision of being amongst Indias"Best Performing Most Respected Foods Companies".
13. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 thereunder in respect of the employees who were in receipt of remunerationaggregating Rs. 60 lakhs or more or were employed for part of the year and were and inreceipt of remuneration aggregating Rs. 5 lakhs per month or more during the financialyear ending 31st March 2016 is provided in the Annexure forming part of thisReport.
14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.
15. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during thefinancial year with related parties were in the ordinary course of business and on anarms length basis. During the year the Company had not entered into any contract orarrangement or transaction with related parties which could be considered material i.e.transactions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statements in accordance with the policy of the Company on materialityof related party transactions Companies Act 2013 and Listing Regulations.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Companyswebsite.:http://www.atfoods.com/ templates / home _ t pl/ pdf/ other _ info /policy_dealing_related_party_transactions.pdf The related party disclosures form part ofthe financial statements provided in this Annual Report.
16. EMPLOYEE STOCK OPTION PLAN
The Company vide special resolution in the Annual General Meeting of the Company heldon 25th July 2012 had approved "Agro Tech Employee Stock Option Plan"("Plan"). The Plan was further modified vide special resolution in the AnnualGeneral Meeting held on 24th July 2015 to align it with the provisions of SEBI(Share Based Employee Benefits) Regulations 2014 ("SEBI Regulations") and otherapplicable provisions for the time being in force. The Plan is administered by Agro TechESOP Trust ("Trust") under the supervision of the Nomination and RemunerationCommittee of the Board of Directors of the Company ("Committee"). The Plan is incompliance with the provisions of SEBI Regulations and there has been no material changein the Plan during the year. Further details of the Plan are available on the website ofthe Company at www.atfoods.com.
17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a good corporate citizen responsible for the communities where we operate yourCompany is involved in a CSR activity under the umbrella of Poshan. The program which isdesigned to address malnourishment amongst children works with GovernmentAnganwadis and Child Malnourishment Treatment Centers using Peanut Butter which is asource of protein and highly effective to fight malnutrition. In FY16 we increasedthe coverage of the program to 10700 children up from 8000 children in the prior year.However spending was lower at 1% due to higher efficiencies in the process and furtherexpansion of the program awaiting necessary governmental approvals. On receipt of theapprovals we will be in a position to further expand this program and work towards the 2%guideline specified in the Companies Act 2013.
As per the Companies Act 2013 all Companies having net worth of Rs. 500 crore ormore or turnover of Rs.1000 crore or more or a net profit of Rs. 5 crore or more duringany financial year will be required to constitute a CSR Committee of the Board ofDirectors comprising three or more directors at least one of whom will be an IndependentDirector.
Aligning with the guidelines the Company has constituted a CSR Committee comprisingLt. Gen. D B Singh as Chairman Mr. Sanjaya Kulkarni Mr. Narendra Ambwani Mr. ArunBewoor Ms. Veena Gidwani Ms. Anna Biehn Mr. Michael Walter and Mr. Javier EduardoAlarcon Ruiz as its Members. The Committee is responsible for formulating and monitoringthe CSR Policy of the Company. The CSR Policy of the Company as approved by the Board ofDirectors is available on the Companys website:http://www.atfoods.com/templates/home_tpl/pdf/ other_info/ATFL%20CSR%20POLICY.pdf. The programPoshan also received the 2014 South Asia Platinum SABRE Award for Corporate SocialResponsibility.
18. RISK MANAGEMENT POLICY
The Company has formulated and adopted risk assessment and minimization framework whichhas been adopted by the Board at the Board Meeting held on 1st May 2006. TheCompany has framed a risk management policy and testing in accordance with the laid downpolicy is being carried out periodically. The Senior Management has been having regularMeetings for reassessing the risk environment and necessary steps are being taken toeffectively mitigate the identified risks. A Risk Management Committee also has beenconstituted with a Committee of the Directors and senior management to address issueswhich may threaten the existence of the Company
19. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by the Board ofDirectors on 17th October 2014. This Whistle Blower Policy of the Companyprovides opportunities to employees to access in good faith to the Management concerns(in certain cases to the Audit Committee) in case they observe unethical or improperpractices (not necessarily a violation of law) in the Company and to secure thoseemployees from unfair termination and unfair prejudicial employment practices. The policyhas also been uploaded on the website of the Company:http://www.atfoods.com/templates/home_tpl/pdf/other_info/ATFL_WB% 20 Policy % 20 final.pdf
20. INFORMATION SYSTEMS
Your Company continues to focus on the use of technology and automation to driveproductivity to work efficiently with our customers & suppliers while making availableto our employees robust information to ensure best in class analysis of the business andidentification of opportunities to improve shareholder return.
21. FINANCE AND ACCOUNTS
21.1 Internal Controls
The Company has a robust system of internal controls commensurate with the size andnature of its operations to ensure orderly and efficient conduct of business. Thesecontrols ensure safeguarding of assets prevention and detection of fraud and erroraccuracy and completeness of accounting records timely preparation of reliable financialinformation and adherence to the companys policies procedures and statutoryobligations.
Your Company has established standard operating procedures for smooth and efficientoperations in addition to ensuring internal controls. Your Company has also documented:
a comprehensive Code of Conduct for the Board Members and employees of yourCompany
An Employee Handbook
Whistle Blower Policy defined to provide channel of communication without fear
Comprehensive framework for Risk Management and
CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has appointed Internal Auditors to ensure adequacy of internal controlsystems and make recommendations thereto. Audit reports are circulated to managementwhich takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the performance asreported by Auditors. The Internal and External Auditors also attend the meetings andconvey their views on the adequacy of internal control systems as well as financialdisclosures. The Audit Committee also issues directives and/or recommendations forenhancement in scope and coverage of specific areas wherever felt necessary.
21.2. Cautionary Statement
Statements in this Directors Report and Management Discussion and Analysisdescribing the companys objectives projections estimates and expectations mayconstitute "forward looking statements" within the meaning of applicable lawsand regulations. Actual results may differ materially from those either expressed orimplied.
We believe that your Company now has the combination of a strong product portfolio anda proven business model for distribution expansion leveraging this broader portfolio. Wewill continue to invest in a balanced manner behind both our brands and expansion ofdistribution to achieve steady profitable growth.
In accordance with the provisions of Article 143 of the Articles of Association of theCompany in so far as it is not inconsistent with the relevant provisions of the CompaniesAct 2013 Ms. Anna Elizabeth Biehn retires by rotation and being eligible offers herselffor reappointment. A brief profile of Ms. Anna Biehn is given in the notice of the 29thAnnual General Meeting. Mr. Michael Walter has tendered his resignation as a Director ofthe Company. The Directors place on record their appreciation of the valuable servicesrendered and wise counsel given by Mr. Michael Walter during his tenure of office asDirector.
Dr. Pradip Ghosh Chaudhuri the Whole-time Director retires from the Company witheffect from 30th June 2016. Mr. Sachin Gopal has been appointed as theAdditional and Managing Director with effect from 1st July 2016 subject toapproval of the shareholders and Central Government as may be applicable. Mr. StevenHarrison is being appointed as an Additional Director of the Company pursuant to theprovisions of Section 161(1) of the Companies Act 2013 and Article 130 of the Articles ofAssociation of the Company.
They hold office up to the date of the ensuing Annual General Meeting. Notice togetherwith the deposit as required under Section 160 of the Companies Act 2013 has beenreceived from a Member proposing the appointment of Mr. Steven Harrison and Mr. SachinGopal as Directors of the Company at the Annual General Meeting.
A brief profile of the above Directors is given in the notice of the 29thAnnual General Meeting.
All the Independent Directors of the Company have also given a confirmation to theCompany as provided under Section 149(6) of the Companies Act 2013 that:
a. they are persons of integrity and possess relevant expertise and experience;
b. i. they were neither are a promoter of the Company or its holding subsidiary orassociate Company; ii. they are not related to promoters or other Directors in theCompany its holding subsidiary or associate Company;
c. they do not have any pecuniary relationship with the Company its holdingsubsidiary or associate Company or their promoters or directors during the twoimmediately preceding financial years or during the current financial year;
d. none of their relatives has or had pecuniary relationship or transaction with theCompany its holding subsidiary or associate Company or their promoters or directorsamounting to two per cent or more of its gross turnover or total income or fifty lakhrupees or such higher amount as may be prescribed whichever is lower during the twoimmediately preceding financial years or during the current financial year;
e. neither they nor their relatives
(i) hold or has held the position of a key managerial personnel or is or has beenemployee of the Company or its holding subsidiary or associate Company in any of thethree financial years immediately preceding the financial year in which they were proposedto be appointed;
(ii) is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which they were proposed to beappointed of(A) a firm of auditors or company secretaries in practice or costauditors of the Company or its holding subsidiary or associate Company; or (B) any legalor a consulting firm that has or had any transaction with the Company its holdingsubsidiary or associate Company amounting to ten per cent or more of the gross turnover ofsuch firm;
(iii) held together with any relatives two per cent or more of the total voting powerof the Company; or
(iv) is a Chief Executive or director by whatever name called of any non-profitorganisation that receives twenty-five per cent or more of its receipts from the Companyany of its promoters directors or its holding subsidiary or associate Company or thatholds two per cent or more of the total voting power of the Company;
f. they possess appropriate skills experience and knowledge in one or more fields offinance law management sales marketing administration research corporategovernance technical operations or other disciplines related to the companysbusiness.
None of the independent Directors will retire at the ensuring Annual General Meeting.
23. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year 2015-16on the following dates:
1. 17th April 2015
2. 24th July 2015
3. 16th October 2015
4. 21st January 2016
24. AUDIT COMMITTEE
The Companys Audit Committee presently comprises of six Directors all except oneare non-executive and Independent Directors. This is in compliance with Clause 49 of theListing Agreement. Lt. Gen. D.B. Singh an Independent Director is the Chairman of theCommittee while Mr. Sanjaya Kulkarni Mr Narendra Ambwani Mr. Arun Bewoor Mr. JavierEduardo Alarcon Ruiz and Ms. Veena Gidwani are its Members. The Charter of the Committeeis in line with the requirements of Section 177 of the Companies Act 2013 and therelevant clauses of the Listing Agreement.
25. CRITERIA FOR REMUNERATING DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Companys Key Managerial Personnel Whole time Director andEmployees is measured on the progress being made on the strategic vision of the Companyand Profitability. Progress against the strategic vision of the Company is measured bycontinued improvement in Gross Margin and share of the Foods business in the total NetSales of the Company. Profitability is measured using Profit After Tax as a singlemeasure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is being provided as an Annexure to this Report.
26. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the requirements of theCompanies Act 2013. The performance evaluation of Independent Directors is done by theentire Board of Directors (excluding the director being evaluated). On the basis of thereport of performance evaluation it shall be determined whether to extend or continue theterm of appointment of the Independent Directors. The Board is evaluated on the basis ofthe following attributes namely guiding strategy nurturing leaders aligning incentivesmanaging risks enhancing the brand and enabling governance.
The remuneration / commission to Non-Executive and Independent Directors shall be fixedas per the provisions contained under Companies Act 2013. The Non- Executive /Independent Directors may receive remuneration by way of fees for attending each meetingof Board or Committee thereof. Provided that the amount of such fees shall not exceed Rs.100000 (Rupees one lakh only) per meeting of the Board or Committee or such amount asmay be prescribed by the Central Government from time to time.
For Independent Women Directors the sitting fee paid is not less than the sitting feepayable to other Directors.
Commission may be paid within the monetary ceiling limit approved by shareholderssubject to the limit not exceeding 1% of the profits of the Company computed as per theapplicable provisions of the Act. An Independent Director shall not be entitled to anystock options of the Company.
Copy of the Nomination and Remuneration policy is annexed as part of this Report and isalso uploaded on the website of the Company http://www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration%20Policy.pdf
27. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To familiarize thenew inductees with the strategy operations business and functions of your Company theSenior Management make presentations to the inductees about the companys strategyoperations and products.
The Company also encourages and supports its Directors to update themselves with therapidly changing regulatory environment. Also at the time of appointment of independentdirectors the Company issues a formal letter of appointment describing their rolesfunctions duties and responsibilities as a Director. The appointment letters issued toindependent directors is uploaded on the website http://www.atfoods.com/templates/home_tpl/pdf/other_info/ter ms_conditions_ appointment_independent_ directors.pdf.
M/s. B S R & Associates LLP Chartered Accountants were recommended forappointment as the Statutory Auditors of the Company to hold office from the conclusion ofthe 27th Annual General Meeting to the conclusion of the 32nd AnnualGeneral Meeting. In terms of the first proviso to Section 139 of the Companies Act 2013the Auditors appointment has to be ratified at every Annual General Meeting.Accordingly the appointment of M/s. B S R & Associates LLP Chartered AccountantsFirm's Registration Number:116231W/W-100024 as the statutory auditors of the Company isplaced for ratification by the shareholders. The Company has received a certificate fromM/s. B S R & Associates LLP to the effect that they are not disqualified fromcontinuing to act as Auditors and would be in accordance with the provisions of Section139 and 141 of the Companies Act 2013 and Companies (Audit and Audit Rules) 2014. TheReport given by the Auditors M/s. B S R & Associates LLP. Chartered Accountants onthe financial statements of the Company is part of the Annual Report. There has been noqualification reservation or adverse remark or disclaimer in their Report. During theyear under review the Auditors had not reported any matter under Section 143(12) of theCompanies Act 2013 and hence no detail is required to be disclosed under Section134(3)(ca) of the Companies Act 2013.
29. SECRETARIAL AUDIT
M/s. Tumuluru & Co Company Secretaries have been appointed to conduct theSecretarial Audit of the Company as required under the provisions of Section 204 of theCompanies Act 2013 and Rule 9 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 for the financial year 2015-16. Copy of the SecretarialAudit Report in Form MR-3 is given as an Annexure to this Directors Report. TheSecretarial Audit Report does not contain any qualification or adverse remarks.
30. SUBSIDIARY COMPANIES
Your subsidiary Sundrop Foods India Private Limited has continued to perform the roleof aiding the expansion of distribution and display of your products. At the end ofFY16 the number of sales staff on the rolls of the Company were 299.
In FY16 your Company commenced the work of installation of equipment for theplant near Dhaka Bangladesh through its wholly owned subsidiary Agro Tech Foods(Bangladesh) Pvt. Ltd. We are currently in the process of seeking regulatory clearancespost which we will be in a position to start work on the supply chain and then commenceproduction. This will enable the Company to build scale in Bangladesh and benefit from theeconomic growth of a neighboring emerging market.
In FY15 your Company also started work on leveraging the wholly-owned subsidiary- Sundrop Foods Lanka (Private) Limited established on 27th January 2015.Limited equipment for the subsidiary has already been shipped from India and in FY17we will be working on establishing a local cost local production model which will enableus to benefit from the growth of our neighboring countries and establish our brands wherewe currently have our presence through export.
During the year the Board of Directors reviewed the affairs of the subsidiaryCompanies. The Company has published the audited consolidated financial statements for thefinancial year 2015-16 and the same forms part of this Annual Report. This Annual Reportdoes not contain the financial statements of our subsidiaries. The statements highlightingthe summary of the financial performance of the subsidiaries in the prescribed format isannexed to this Report. The audited financial statements and related information ofsubsidiaries are available for inspection during business hours at our registered officeand will be provided to any shareholder on demand. The separate audited financialstatements in respect of each subsidiary companies is also available on the website ofyour Company. http://www.atfoods.com/ investor-relations/annual-reports.html
31. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of theCompanies Act 2013 and Rule 12 of the Companies (Management & Administration) Rules2014 prepared as on 31st March 2016 is attached as an Annexure to thisDirectors Report.
Your Directors state that no disclosures or reporting are being made in respect of thefollowing items as there were no applicable transactions or events on these items duringthe year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except under the ESOP scheme referred to in this Report.
4. The Whole-time Director of the Company does not receive any remuneration orcommission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and companys operations in future.
6. No cases reported or filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
7. During the year your Company has not accepted any public deposits under Chapter Vof Companies Act 2013. In terms of the provisions of Investor Education and ProtectionFund (Awareness and Protection of Investors) Rules 2001 Rs. 0.32 Million (as on 30thApril 2016) of unpaid / unclaimed dividends will be transferred to Investor Education andProtection Fund before 30th July 2016.
The Board places on record their appreciation for the contribution of its customersemployees distributors co-packers suppliers and all other stakeholders towardsperformance of the Company during the year under review.
| ||On Behalf of the Board |
|Sachin Gopal ||Lt. Gen. D.B. Singh |
|President & CEO ||Director |
| ||DIN 00239637 |
| ||Dr. Pradip Ghosh Chaudhuri |
| ||Whole-time Director |
|Dt: 26th April 2016. ||DIN 02650577 |
ANNEXURES TO DIRECTORS REPORT
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO
(Information under Rule 8(3) of the Companies (Accounts) Rules 2014
1. CONSERVATION OF ENERGY
Energy conservation is an indicator of how efficiently a company can conduct itsoperations. ATFL recognizes the importance of energy conservation and has undertakenvarious energy efficient practices that have strengthened the Companys commitmenttowards becoming an environment friendly organization.
Your Company continues to use energy efficient and sustainable HVAC programs atmanufacturing facilities established at Kothur Hyderabad Kashipur Uttarakhand UnnaoUttar Pradesh and Jhagadia Gujarat. In addition the Company has ensured that all newlighting is moving to LED lamps together with a phasing out of all non LED lightingthrough a phased replacement program.
2. TECHNOLOGY ABSORPTION
In FY16 your Company continued to work on low cost Capital Expenditure options tomaximize Asset Turns for our operations. The strategy enabled us to introduce a worldclass Tortilla Chip into the Indian market place which has already been extremelysuccessful. In addition your Company also worked on transferring best practices from theSnacks category into the Spreads category with the launch of low cost Sachets to drivetrial of the peanut butter category.
3. RESEARCH & DEVELOPMENT (R&D)
Your Company has spent about Rs. 27.47 Million this year towards Research andDevelopment totaling to about 0.35% of the Companys turnover. Specific areas inwhich R & D was carried out by the Company include development of Extruded SnacksSavory Peanuts launch of Tortilla Chips and new flavors of Ready to Eat Popcorn.
4. FOREIGN EXCHANGE EARNINGS AND OUTGO(Accrual basis)
| ||Rs. MM |
|Foreign Exchange earned in terms of inflows ||23.62 |
|Foreign Exchange outgo in terms of outflows ||540.44 |
On Behalf of the Board
|Sachin Gopal ||Lt. Gen. D.B. Singh |
|President & CEO ||Director |
| ||DIN 00239637 |
| ||Dr. Pradip Ghosh Chaudhuri |
| ||Whole-time Director |
|Dt: 26th April 2016 ||DIN 02650577 |
DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) and (2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014
(A) The percentage increase in remuneration of each Director and KMPs during thefinancial year 2015-16 and ratio of the remuneration of each Director to the medianremuneration of the employees of the Company for the financial year 2015-16 :
|S.No. ||Name of the Director/KMP and Designation ||Remuneration of Directors / KMP for Financial year 2015-16 in Rs. ||%age increase in the remuneration in the FY 2015-16 ||Ratio of the remuneration of each Director to the median remuneration of the employees |
|1. ||Ms. Anna Elizabeth Biehn || || || |
| ||Chairperson ||- ||- ||- |
|2. ||Mr. Javier Eduardo Alarcon Ruiz || || || |
| ||Non-Executive Director ||- ||- ||- |
|3. ||Mr. Michael Walter || || || |
| ||Non-Executive Director ||- ||- ||- |
|4. ||Lt. Gen. D B Singh || || || |
| ||Non-Executive Director ||1237500 ||31.3% ||2.2:1 |
|5. ||Mr. Sanjaya Kulkarni || || || |
| ||Non-Executive Director ||1237500 ||31.3% ||2.2:1 |
|6. ||Mr. Narendra Ambwani || || || |
| ||Non-Executive Director ||1237500 ||31.3% ||2.2:1 |
|7. ||Mr. Arun Bewoor || || || |
| ||Non-Executive Director ||1237500 ||31.3% ||2.2:1 |
|8. ||Ms. Veena Gidwani** || || || |
| ||Non-Executive Director ||1237500 ||134% ||2.2:1 |
|9. ||Dr. Pradip Ghosh Chaudhuri || || || |
| ||Whole-Time Director ||6997327 ||5.4% ||12.6:1 |
|10. ||Mr. Sachin Gopal || || || |
| ||President & CEO ||23894611 ||-1.9% ||Not Applicable |
|11. ||Mr. Hemant Kumar Ruia || || || |
| ||CFO* ||2868111 ||- ||Not Applicable |
|12. ||Mr. Arijit Datta || || || |
| ||CFO$ ||4617873 ||- ||Not Applicable |
|13. ||Mr. Phani Mangipudi || || || |
| ||Company Secretary ||3454310 ||17.3% ||Not Applicable |
** Comparative remuneration of Ms. Veena Gidwani reflects a base taken of part paymentin the previous year.
* Mr. Hemant Kumar Ruia resigined as CFO during the year and hence comparison is notbeing provided.
$ Comparative details of Mr. Arijit Datta are not being provided as he was not a KMPin the financial year 2014-15.
In the financial year there was an increase of 15% in the median remunerationof employees;
There were 397 permanent employees on the rolls of Company as on 31stMarch 2016;
The Company follows a practice of benchmarking the salaries of positions insimilar Companies and adjusts the salaries of employees to make those competitive in themarket. Other factors considered for salary revision are salary inflation in the marketreward for performance and retention risk. The average increase in the remuneration ofemployees was 7% reflecting the efforts put in by the employees for a steady growth in thefoods business by 7.6% while taking into account a 1.7% decrease in the Gross Margin ofthe Company.
There was a 20% decrease in the remuneration of Key Managerial Personnel ascompared to a 1.7% decrease in the Gross Margin of the Company.
a) Variations in the market capitalisation of the Company : The marketcapitalisation as on 31st March 2016 was Rs. 11234 MM (Rs. 16065 MM as on31st March 2015)
b) Price Earnings ratio of the Company was 48.07 as at 31st March 2016 andwas 43.09 as at 31st March 2015.
c) The closing share price of the Company at BSE Limited on 31st March 2016being Rs. 461.00 per equity share of face value of Rs. 10/- each has grown 4.61 timessince the last rights offer made in the year 1992 (Offer Price was Rs. 100/- per equityshare of face value of Rs. 10/- each).
Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e. 2015-16 was 12 % whereas the increasein the managerial remuneration for the same financial year was 5%. Both increases are inline with the market benchmarking and there are no exceptional circumstances and increasesfor managerial remuneration.
Comparison of Remuneration of the Key Managerial Personnel(s) against theperformance of the Company: The total remuneration of Key Managerial Personnel decreasedby 20% from Rs. 49 MM in 2014-15 to Rs. 39 MM in 2015-16 and the Gross Margin decreasedfrom Rs.1897.64 MM in 2014-15 to Rs. 1826.48 MM in 2015-16.
The key parameters for the variable component of remuneration availed by thedirectors are considered by the Board of Directors based on the recommendations of theHuman Resources Nomination and Remuneration Committee as per the Nomination andRemuneration Policy of the Company.
The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year is 1:3.5.
It is hereby affirmed that the remuneration paid is as per the RemunerationPolicy for Directors Key Managerial Personnel and other Employees.
(B) Information under Section 197(12) of the Companies Act 2013 read with Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andforming part of the Directors Report for the financial year ended 31st March2016 A. Employed throughout the year and in receipt of remuneration of Rs. 6000000 andabove
|SR. NO. ||NAME OF THE EMPLOYEE ||AGE ||QUALIFICATIONS ||DESIGNATION/ NATURE OF DUTIES ||DATE OF COMMENCEMENT OF EMPLOYMENT ||EXPERIENCE (YEARS) ||REMU- NERATION Rs. ||% OF EQUITY SHARES HELD ||LAST EMPLOYMENT |
|1. ||Sachin Gopal ||56 ||B.A. MBA ||President & CEO ||02.04.2007 ||35 ||23894611 ||0.18 ||Procter & Gamble |
|2. ||Asheesh Kumar Sharma ||46 ||B.Sc. PGDBM ||Vice President- Marketing ||02.07.2007 ||24 ||10405743 ||- ||Gillete India Ltd |
|3. ||Dharmesh K Srivastava ||52 ||M.Tech. MBA ||Vice President - Supply Chain & Procurement ||08.07.2008 ||27 ||7992354 ||- ||Procter & Gamble |
|4. ||N Narasimha Rao ||56 ||B.Sc. Master of Personnel Mgmt. ||Sr VP HR & Corporate Communications ||24.07.2006 ||31 ||13452531 ||- ||Reliance Infocom |
|5. ||Nilesh Agarwal ||39 ||B.Com. PGDBM ||Head of Sales ||08.06.2008 ||19 ||7433949 ||- ||Print-O-Graphics |
|6. ||Pradip Ghosh Chaudhuri ||63 ||B.Sc. M.Tech. Ph.D ||Vice President Manufacturing ||06.05.1996 ||40 ||6997327 ||- ||K N Oil Industries |
|7. ||Satish Kumar Singh ||50 ||M.Sc. M.Tech ||Vice President Research Quality & Innovation ||09.01.2006 ||26 ||7856870 ||- ||Perfetti Van Melle |
Employed partly during the year and in receipt of remuneration of Rs. 500000 andabove per month
|SR. NO. ||NAME OF THE EMPLOYEE ||AGE ||QUALIFICATIONS ||DESIGNATION/ NATURE OF DUTIES ||DATE OF COMMENCEMENT OF EMPLOYMENT ||EXPERIENCE (YEARS) ||REMU- NERATION Rs. ||% OF EQUITY SHARES HELD ||LAST EMPLOYMENT ||DATE OF LEAVING |
|1. ||Hemant Kumar Ruia ||48 ||CA CFA & Cost Accountant ||VP & CFO Finance IS & Legal ||05.12.2007 ||23 ||2868111 ||- ||Reckitt Benckiser (India) Limited ||25.05.2015 |
|2. ||Mehul Pathak ||53 ||B.E.(Mech) Master of Mgmt Studies ||Head of Sourcing Emerging Markets ||06.12.2006 ||30 ||21906880 ||- ||MARICO Industries Limited ||04.02.2016 |
1. All appointments are contractual.
2. No director is related to any other director or employee of the Company listedabove.
3. Remuneration received / receivable includes salary bonus commission medicalexpenses Companys contribution to Retiral Funds rent/allowance paid for providingresidential accommodation and where it is not possible to ascertain the actual expenditureincurred by the Company in providing a perquisite the monetary value of such perquisitescalculated in accordance with the Income Tax Act 1961 and rules made thereunder.
| || ||On Behalf of the Board || |
| ||Sachin Gopal ||Lt. Gen. D.B. Singh ||Dr. Pradip Ghosh Chaudhuri |
| ||President & CEO ||Director ||Whole-time Director |
|Dt: 26th April 2016 || ||DIN 00239637 ||DIN 02650577 |