REPORT OF THE DIRECTORS AND MANAGEMENT DISCUSSION & ANALYSIS
Your Directors hereby present their Annual Report together with the audited accountsof the Company for the financial year ended 31st March 2017.
1. PERFORMANCE OF THE COMPANY
Your Company's performance for the year ended 31st March 2017 is as follows:
| || ||( Rs. Millions) |
| ||2016-17 ||2015-16 |
|Net Sales ||8043.19 ||7801.94 |
|Other Income ||23.67 ||20.16 |
|Total Income ||8066.86 ||7822.10 |
|Operating Expenses ||7433.38 ||7252.80 |
|PBDIT ||633.48 ||569.30 |
|Depreciation ||172.24 ||160.12 |
|Interest ||45.48 ||53.28 |
|Profit before Tax and || || |
|exceptional item ||415.76 ||355.90 |
|Exceptional item ||42.09 ||- |
|Profit Before Tax (PBT) ||457.85 ||355.90 |
|Taxes ||168.28 ||122.31 |
|Profit After Tax (PAT) ||289.57 ||233.59 |
Net Sales for the year at Rs. 8043.19 MM were 3% higher than Prior Year. Thisreflected a continued strong growth in the 3 core categories of Act II Ready to CookPopcorn Act II Nachoz and Sundrop Peanut Butter which increased revenues by 13% on aconsolidated basis to reach a turnover of c Rs.150 crore. Sundrop Oils & Crystal Oilsgrew by 3% and 4% respectively while the Vending Business declined by 64%. Your Companycontinues to refine the business model for Ready to Eat Popcorn and Extruded Snacks whichin addition to providing a platform for overall growth will also begin to be growthdrivers in their own right with refinement of the model. Profit Before Tax &exceptional item increased by 17% driven by improved Gross Margin and lower InterestCosts while Profit After Tax increased by 24% benefiting from a higher Profit Before Taxand Interest on Income Tax refund of Rs. 42.09 MM partially offset by an Income Taxdisallowance pertaining to the period 2012-2015 increasing our Income Tax payout by Rs.14.5 MM.
1.2 Key Indicators
| || ||( Rs. Millions) |
| ||2016-17 ||2015-16 |
|Gross Margin (GM) ||1880.66 ||1826.48 |
|GM % ||23.4% ||23.4% |
|Advertising & Sales Promotion ||412.76 ||426.50 |
|A&P % ||5.1% ||5.5% |
Gross Margin increased by 3% in line with the increase in Net Sales resulting in GM%steady at 23.4%. This reflects largely the impact of a steadily growing GM on the coredrivers of Act II Ready to Cook Popcorn Act II Nachoz and Sundrop Peanut Butter. Thestrong double digit growth in revenue in these categories reflects a working combinationof continued distribution expansion steady investments in media and a strong valueproposition.
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 year ended 31st March 2017 subject to the approval of the shareholders at the AnnualGeneral Meeting to be held on 26th July 2017.
| ||2016-17 ||2015-16 |
|Profit after Tax ||289.57 ||233.59 |
|Profit brought forward from ||2275.56 ||2041.97 |
|Previous year || || |
|Surplus available for ||2565.13 ||2275.56 |
|Appropriation || || |
|Dividend paid at the rate of || || |
|` 2 /- each* ||48.74 ||- |
|Dividend Distribution Tax ||9.92 ||- |
|Forward to the following year ||2506.47 ||2275.56 |
*Dividend related to FY 15-16 paid in current year. Also refer note no. 2.2 in notes toaccounts.
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 for safeguarding 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 Regulations 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' Report anda separate MD&A is avoided and the entire material is provided in a composite andcomprehensive document.
6. INDUSTRY STRUCTURE & DEVELOPMENTS
A steadily improving outlook for business in India means that the Food industry as wellis recovering from a sluggish phase into a phase of more steady and sustained growth. YourCompany is well placed to capture a fair share of this growth having taken significantmeasures in the last few years in both manufacturing capacities and distributionexpansion. We expect to be able to continue to deliver strong growth and take advantage ofthe significant capital investments we have recently completed behind products with clearcompetitive advantage and "right to win".
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.
In the FY'16 Director's Report we had commented on the continuing opportunity presentedby digitization in today's world. We are happy to report therefore that in FY'17 we haveseen continued growth in the digital space with our E commerce business growing by over100% over the Prior Year and we will continue to work to leverage this opportunity.
In addition we also see a significant consumption opportunity presented by risingincomes at the bottom of the pyramid which will initially provide your Company thefeasibility of being a carrier to expand our town coverage and over time become a businessin its' own right. This requires however a cost structure which is extremely competitivebesides having a diversified manufacturing footprint. To address this your Company hasbeen steadily improving its' footprint and we are happy to report that in March 2017 weopened our fifth Foods facility in Mangaldai (Assam) which joins our four other Foodsfacilities in Kashipur (UK) Kothur (Telangana) Jhagadia (Gujarat) and Unnao (UP) in oureffort to make possible high quality products at the lowest possible delivered cost to ourcustomers.
8. STATE OF THE COMPANY'S AFFAIRS
In FY'17 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 FY'16 your Company had increased its investment in Distribution Expansion to employc 200 additional salesmen. The 200 additional Feet on Street were designed to provide avirtuous cycle of distribution expansion and as per plan enabled us to further increasecoverage by an additional c 40000 stores in FY'17.
As demonstrated by your Company's performance during the demonetization exercise theshare of wholesale in our business is still very low and our widening portfolioparticularly at the bottom of the pyramid offers us the opportunity to strengthen ourdistribution network and gain scale in towns where our presence is currently limited tothe top stores servicing the top SEC of the geography. Accordingly in FY'17 your Companyalso appointed 60 additional Feet on Street in select states for the wholesale channel amove which is designed to strengthen our town coverage and will help to get scale at ourplants logistics and distribution network.
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 India's "BestPerforming Most Respected Food Companies".
9. PRODUCT CATEGORIES
Steady and sustained media support together with continued Distribution Expansionenabled Act II to deliver double digit volume growth in FY'17 with an acceleration ingrowth of the strategic Instant Popcorn of c 400 basis points vs exit FY'16. Act II is nowamongst the most diversified snack brands in Western Snacks. We will continue to supportthe brand with further innovation and brand extension to grow as rapidly as possible toour near term goal of making Act II a Rs. 500 crore brand.
As stated in our annual report for FY'16 we had commenced a selective entry into IndianSnacks with Sundrop Peanuts. As we gain a better understanding of this category we will beexpanding the product range so that we can be a full scale Snacks player in the rapidlygrowing Snacks market in India.
In March 2017 our fifth plant commenced commercial production at Mangaldai in Assam. InFY'18 we will be stabilizing our operation at this plant while we commence construction ofour 6th facility at Chittoor in Andhra Pradesh which will also be an effective sourcingpoint for both Tamil Nadu and Karnataka. The commencement of production at Chittoor willbring us one step closer to our vision of a 7 plant national network leaving only thewaiting for necessary regulatory approvals for construction of a plant near Kolkatta.
In FY'17 our Peanut Butter business grew by 26% in Volume and 18% in Value. Thesuccessful launch of the large pack (924 gm) together with penetrative low cost sachetpacks enabled us to capture our fair share of revenues of the fast growing Peanut Categorydriven by sustained media support.
Going forward we will continue to invest behind the Category through sustained mediasupport continued distribution expansion and additional innovation.
9.3 Edible Oils & Sprays:
In FY'17 we recorded a steady performance on Sundrop Edible Oils with a Volume Growthof 2% and a Value Growth of 3%. Crystal Oil which is sold largely in the states of AndhraPradesh and Telangana recorded a growth of 3% in Volume and 4% in Value. Your Companycontinues to support our flagship Sundrop Heart in this Category with adequate level ofinvestments to ensure that our position in this category remains healthy and profitablewhile delivering the highest returns to our shareholders.
10. RESEARCH QUALITY & INNOVATION (RQI)
Your Company continues to focus on innovation as a driver of growth. In FY'17innovation included the launch of the unique Microwave Popcorn Tub which offers an in homeexperience similar to that of a cinema hall. FY'18 will see us continuing to driveinnovation both on our existing products and on brand extensions.
11. CONSERVATION OF ENERGY ABSORPTION TECHNOLOGY FOREIGN EXCHANGE AND
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
The steady growth in the Foods business of the Company means that more jobs are beingcreated both in Manufacturing and Sales. In FY'17 the total number of people associatedwith the Company either directly or indirectly increased to c 2500 persons as aconsequence of continued growth in the business and resultant increase both in selling andmanufacturing resources.
Your Company will continue to work to ensure that we have a highly engaged andproductive organization to deliver against our vision of being amongst India's "BestPerforming 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)Amendment Rules 2016 thereunder in respect of the top ten employees in terms ofremuneration drawn and employees who were in receipt of remuneration aggregating Rs. 1.02crores or more or were employed for part of the year and were and in receipt ofremuneration aggregating Rs. 8.50 lakhs per month or more during the financial year ending31st March 2017 is provided in the Annexure forming part of this Report.
14. PARTICULARS OF LOANS GUARANTEES OR
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 anarm's length basis. During the year the Company had not entered into any contract orarrangement or transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactionsCompanies 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 Company's website :http://www.atfoods.com/ templates / home _ tpl / 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 (ShareBased 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 Government Anganwadi's andChild Malnourishment Treatment Centers using Peanut Butter which is a source of proteinand highly effective to fight malnutrition. In FY'17 we increased the coverage of theprogram to 12554 children up from 10700 children in the prior year. However spendingwas lower at 1% due to higher efficiencies in the process and further expansion of theprogram awaiting necessary governmental approvals. On receipt of approvals we will be in aposition to further expand this program and work towards the 2% guideline in the CompaniesAct 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) @ (Mr. Steven Lee Harrison Ms. Denise Lynn Dahl and Ms. Jill Rahman)* asits Members. The Committee is responsible for formulating and monitoring the CSR Policy ofthe Company. The CSR Policy of the Company as approved by the Board of Directors isavailable on the Company's website:http://www.atfoods.com/ templates / home _ tpl / pdf /other _ info / ATFL%20CSR%20POLICY.pdf. The program Poshan also received the 2014 SouthAsia Platinum SABRE Award for Corporate Social Responsibility.
@ Mr. Michael D Walterre signed as Member on 26th April 2016 Mr. Javier EduardoAlarcon Ruiz resigned as Member on 15th July 2016 and Ms. Anna Biehn resigned as Memberon 30th December 2016.
* Mr. Steven Lee Harrison has been appointed as Member on 26th April 2016 Ms. DeniseLynn Dahl has been appointed as Member on 24th August 2016 and Ms. Jill Rahman as Memberon 18th January 2017.
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. The Company hasframed a risk management policy and testing in accordance with the laid down policy isbeing carried out periodically. The Senior Management has been having regular Meetings forreassessing the risk environment and necessary steps are being taken to effectivelymitigate the identified risks. A Risk Management Committee also has been constituted witha Committee of the Directors and senior management to address issues which may threatenthe 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 Company providesopportunities to employees to access in good faith to the Management concerns (incertain cases to the Audit Committee) in case they observe unethical or improper practices(not necessarily a violation of law) in the Company and to secure those employees fromunfair termination and unfair prejudicial employment practices. The policy has also beenuploaded on the website of the Company:http://www.atfoods.com/templates/home_tpl/pdf/other_info/ATFL_WB%20Policy %20final.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 Company's policies procedures and statutory obligations.
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 Analysis describingthe Company's objectives projections estimates and expectations may constitute"forward looking statements" within the meaning of applicable laws andregulations. Actual results may differ materially from those either expressed or implied.
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 Mr. Steven Lee Harrison retires by rotation and being eligible offers himselffor reappointment. A brief profile of Mr. Steven Lee Harrison is given in the notice ofthe 30th Annual General Meeting.
Mr. Javier Eduardo Alarcon Ruiz and Ms. Anna Biehn have resigned as Directors of theCompany. The Directors place on record their appreciation of the valuable servicesrendered and wise counsel given by Mr. Javier Eduardo Alarcon Ruiz and Ms. Anna Biehnduring their tenure of Office as Directors. Ms. Denise Lynn Dahl was appointed as anAdditional Director of the Company pursuant to the provisions of Section 161(1) of theCompanies Act 2013 and Article 130 of the Articles of Association of the Company.
She holds 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 Ms. Denise Lynn Dahl as Director ofthe Company at the Annual General Meeting. A brief profile of Ms. Denise Lynn Dahl isgiven in the notice of the 30th Annual 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 the Company its holdingsubsidiary 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 cost auditors of theCompany or its holding subsidiary or associate Company; or (B) any legal or a consultingfirm that has or had any transaction with the Company its holding subsidiary orassociate Company amounting to ten per cent or more of the gross turnover of such 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-profit organisation
that receives twenty-five per cent or more of its receipts from the Company any of itspromoters directors or its holding subsidiary or associate Company or that holds two percent or more of the total voting power of the Company; f. they possess appropriate skillsexperience and knowledge in one or more fields of finance law management salesmarketing administration research corporate governance technical operations or otherdisciplines related to the company's business.
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 2016-17on the following dates:
1. 26th April 2016
2. 27th July 2016
3. 19th October 2016
4. 18th January 2017
24. AUDIT COMMITTEE
The Company's Audit Committee presently comprises of six Directors all except one arenon-executive and Independent Directors. This is in compliance with Clause 49 of theListing Agreement Companies Act 2013 and the SEBI (Listing obligations and DisclosureRequirements) Regulations 2015. Lt. Gen. D.B. Singh an Independent Director is theChairman of the Committee while Mr. Sanjaya Kulkarni Mr Narendra Ambwani Mr. Arun BewoorMr. Javier Eduardo Alarcon Ruiz@ Ms. Denise Lynn Dahl * and Ms. Veena Gidwani are itsMembers. The Charter of the Committee is in line with the requirements of Section 177 ofthe Companies Act 2013 and the relevant clauses of the Listing Regulations.
@ Mr. Javier Eduardo Alarcon Ruiz has resigned as Director on 15th July 2016.
*Ms. Denise Lynn Dahl was appointed as Director on 24th August 2016.
25. CRITERIA FOR REMUNERATING DIRECTORS KEY
MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Company's 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 Director may receive remuneration by way of fees for attending each meeting ofBoard 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 Company's 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 roles functions dutiesand responsibilities as a Director. The appointment letters issued to independentdirectors is uploaded on the websitehttp://www.atfoods.com/templates/ h o m e _ t p l / pd f / o t h e r _ i n f o / t e r m s _ 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 Annual General Meeting. Interms of the first proviso to Section 139 of the Companies Act 2013 the Auditors'appointment has to be ratified at every Annual General Meeting. Accordingly theappointment of M/s. B S R & Associates LLP Chartered Accountants as the statutoryauditors of the Company is placed for ratification by the shareholders. The Company hasreceived a certificate from M/s. B S R & Associates LLP to the effect that they arenot disqualified from continuing to act as Auditors and would be in accordance with theprovisions of Section 139 and 141 of the Companies Act 2013 and Companies (Audit andAudit Rules) 2013. The Report given by the Auditors M/s. B S R & Associates LLP.Chartered Accountants on the financial statements of the Company is part of the AnnualReport. There has been no qualification reservation or adverse remark or disclaimer intheir Report. During the year under review the Auditors had not reported any matter underSection 143(12) of the Companies Act 2013 and hence no detail is required to bedisclosed under Section 134(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 2016-17. Copy of the SecretarialAudit Report in Form MR-3 is given as an Annexure to this Director's 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 of FY'17the number of sales staff on the rolls of the Company were 386.
Your company's wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd isexpected to commence production in FY'18. This will enable the Company to build scale inBangladesh and benefit from the economic growth of a neighboring emerging market.
In FY'18 we will also be working towards leveraging your Company's wholly-ownedsubsidiary Sundrop Foods Lanka (Private) Limited and seek to establish a local low costproduction model which will enable us to benefit from the growth of our neighboringcountries.
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 2016-17 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 2017 is attached as an Annexure to this Directors' 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 & Managing Director & CEO of the Company does notreceive any remuneration or commission 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 Company's 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 provisions of Investor Education and Protection Fund(Awareness and Protection of Investors) Rules 2001 Rs. 0.41 Million (as on 31st March2017) of unpaid /unclaimed dividends will be transferred to Investor Education andProtection Fund before 1st September 2017.
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 |
|Managing Director & CEO ||Director |
|DIN 07439079 ||DIN 00239637 |
|Dt: 3rd May 2017 || |