The Board of Directors present you the Ninth Annual Report on business and operationsalong with the audited financial statements and the auditor's report of your Company forthe financial year ended 31st March 2017.
Amount In Rs.Million
|Particulars ||Coffee Day Enterprises Limited ||Coffee Day Enterprises Limited ||Coffee Day Global Limited ||Coffee Day Global Limited |
| ||(Consolidated) ||(Consolidated) ||(Consolidated) ||(Consolidated) |
| ||FY 17 ||FY 16 ||FY 17 ||FY 16 |
|Gross Operational Revenue ||35519 ||30943 ||17728 ||15520 |
|Finance charges ||3172 ||3595 ||479 ||493 |
|Depreciation ||2268 ||2517 ||1633 ||1526 |
|Profit Before Tax ||1371 ||350 ||498 ||393 |
|Income Tax ||555 ||446 ||230 ||150 |
|Profit for the period ||462 ||-425 ||264 ||241 |
During the fiscal year ended 31st March 2017 consolidated gross revenue grew by 15%driven by strong impetus from Coffee and Multimodal Logistics. The retail gross revenue inthe coffee business contributed by a growth of 14%. Consolidated Profit after tax andexceptional is Rs.462 Million for the year 2017 compared to loss of Rs.425 Million for theprevious year.
A detailed performance analysis is provided in the Management Discussion and Analysissegment which is annexed to this report.
STATE OF COMPANY'S AFFAIRS
The state of Company affairs forms part of Management Discussion & Analysis Report.
The Board of Directors of your Company has not recommended any dividend for thefinancial year 2016-17.
TRANSFER TO RESERVES
The Company has not transferred any amount to reserves during the year and hence noinformation as per the provisions of Section 134 (3) (j) of the Companies Act 2013 hasbeen furnished.
ISSUANCE OF NON-CONVERTIBLE DEBENTURES (NCD'S)
The Company had during the Financial year 2016-17 sought shareholders approval in theAnnual General Meeting for issuance of NCD's for an amount not exceeding Rs.550 Crores. On11th March 2017 the Board of Directors at its meeting issued NCD's for an amount of Rs.290Crores for Identifiable Investors and on 30th March 2017 the Board of Directors at itsmeeting issued NCD's for an amount of Rs.150 Crores for the purpose of restructuring itsexisting debts.
APPROVAL OF MERGER BETWEEN COFFEE DAY OVERSEAS PRIVATE LIMITED WITH COFFEE DAYENTERPRISES LIMITED
The Scheme of Amalgamation between COFFEE DAY OVERSEAS PRIVATE LIMITED with COFFEE DAYENTERPRISES LIMITED was approved by the Board of Directors at the Meeting held on 11thAugust 2016 and the approvals were sought from all the respective authorities viz;Competition Commission of India Bombay Stock Exchange National Stock Exchange of IndiaLimited (Designated Stock Exchange) and vide the National Company Law Tribunal Order dated02nd February 2017 ordered a Shareholders Meeting on 10th March 2017 and the same waspassed with requisite majority approving the merger.
National Stock Exchange of India vide its observation letter had ordered a PostalBallot for approving the scheme of Merger between COFFEE DAY OVERSEAS PRIVATE LIMITED withCOFFEE DAY ENTERPRISES LIMITED with the majority constituting Public Shareholders and theResolution was passed with consent of 99.99% majority.
The Company has not accepted any fixed deposits from public pursuant to Section 73 ofthe CA 2013 and rules thereunder.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company makes investments or extends loans/guarantee to its wholly ownedsubsidiaries for their business purpose. The details of loans guarantees and investmentsare covered under section 186 of the Companies Act 2013 along with the purpose for whichsuch loan or guarantee is proposed to be utilized by the recipient form part of the notesto the financial statements provided in this annual report.
The Company has formulated a policy for determining material' subsidiariespursuant to the provisions of the SEBI (LODR) 2015. The said policy is available at theCompany website: www.coffeeday.com
The Company has 44 subsidiaries (including indirect subsidiaries) as on 31st March2017.
As per section 129(3) of the Companies Act 2013 the consolidated financial statementsof the Company and its subsidiaries form part of the Annual Report. A Statement containingthe salient features of the financial statements of its subsidiaries in the prescribedForm AOC-1 is attached as Annexure to Consolidated Financial Statements.
In accordance with section 136 (1) of the Companies Act 2013 the financial statementsof the subsidiary companies are available on our website www.coffeeday.com post approvalof the members.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Management Discussion & Analysis forms part of this annual report and it is annexedto the Directors report-Annexure-1.
The report on Corporate Governance as stipulated by under SEBI (LODR) 2015 forms partof the Annual Report. The requisite Certificate from a practicing Company Secretaryconfirming compliance with the conditions of Corporate Governance is attached to thisReport-Annexure-2.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
In accordance with Section 178(3) of the Companies Act 2013 and Regulation 19 of SEBI(LODR) 2015 the Board had adopted Policy on Director's appointment and remuneration asrecommended by the Nomination and Remuneration Committee. The policy is attached asAnnexure-3.
A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender knowledge and geographical background. The
Board recognises the importance of a diverse composition and has adopted a BoardDiversity Policy which sets out the approach to diversity. The policy is available atwww.coffeeday.com
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013.
As per the provisions of the Companies Act 2013 and SEBI (LODR) 2015 an evaluation ofthe performance of the Board Committee and members was undertaken.
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of various criteria such as Board structure strategicdiscussions effective reviews process Boards engagement with senior management teametc. The performance of the Committee was evaluated by the Board on the basis ofcomposition effective discharge of its function and recommendations provided. Performanceof the Individual Directors was evaluated on the basis of Integrity Commitment Abilityto exercise independent judgement etc. The feedback was collated and discussed at theBoard and action points for improvement is put in place.
APPOINTMENTS /RESIGNATION /RE_APPOINTMENTS OF BOARD OF DIRECTORS
During the year there has been no change in the Composition of Directors.
Mrs. Malavika Hegde shall retire by rotation at the ensuing Annual General meeting andis eligible for re-appointment.
COMMITTEES OF THE BOARD
The details of Boards Committees the Audit Committee the Nomination andRemuneration Committee and the Stakeholders Relationship Committee have been disclosedseparately in the Corporate Governance Report which is annexed to and forms a part of thisannual report.
The Audit Committee comprises of Mr. S.V. Ranganath Chairman with Dr. AlbertHieronimus and Mr. V.G. Siddhartha as members. The functions performed by the AuditCommittee and the particulars of meetings held and attendance there at are given in theCorporate Governance Report.
MEETINGS OF THE BOARD
The Board duly met 6 times (Six) during the financial year 2016-17. Details of themeetings are mentioned in the Corporate Governance Report which is annexed to this Report.
RELATED PARTY CONTRACTS OR ARRANGEMENTS
The Company has formulated a policy on "materiality of related partytransactions" and the process of dealing with such transaction which are in linewith the provisions of the Companies Act 2013 and SEBI (LODR) 2015. The same is alsoavailable on the website of the Company www.coffeeday.com
Prior omnibus approval from the Audit Committee are obtained for transactions which arerepetitive and also normal in nature. Further disclosures are made to the Committee on aquarterly basis.
There have been no material related party transactions undertaken by the Company underregulation 23 of the SEBI (LODR) 2015 and detail of the transaction approved by the Boardunder section 188 of the Companies Act 2013 have been enclosed pursuant to clause (h) ofsubsection (3) of Section 134 of Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014.
There have been no material related party transactions undertaken by the Company underSection 188 of the Companies Act 2013 and hence no details have been enclosed pursuantto clause (h) of subsection (3) of Section 134 of Companies Act 2013 read with Rule 8(2)of the Companies (Accounts) Rules 2014 AOC-2'.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
No material changes and commitments have occurred after the close of the year till thedate of this report which affect the financial position of the Company.
CHANGE IN NATURE OF BUSINESS
There has been no change in the nature of business of the Company.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS & OUTGO
The particulars as prescribed under section 134 (3) (m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 are attached as Annexure 4.
a) Statutory Auditors
The members in their AGM held on 30th September 2014 had appointed M/s B S R & CoLLP Chartered Accountants as statutory auditors for a term of 5 consecutive years. Henceshareholders are hereby proposed to ratify the appointment of auditors from conclusion ofthis AGM to the conclusion of the next AGM.
b) Secretarial Auditor
Pursuant to Section 204 of the Companies Act 2013 M/s HRB & Co was appointed toconduct the secretarial audit of the Company for the FY 2016-17. The secretarial auditreport is attached as Annexure 5.
c) Cost Auditor
Pursuant to Section 148 of the Companies Act 2013 the provisions for appointment ofCost Auditors do not apply to the Company.
d) Internal Auditor
In terms of Section 138 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 the Company has appointed M/s. A B S & Co Chartered Accountants asInternal Auditors.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURTS/REGULATORS
There is no significant orders passed by the regulator Court or tribunals impactingthe going concern status and the Company's operations in future.
EXTRACT OF ANNUAL RETURN
An extract of the Annual return has been annexed to the Board's Report in compliancewith Section 92 of the Companies Act 2013 read with applicable rules made thereunderannexed as Annexure 6 to this Report.
BUSINESS RESPONSIBILITY REPORT
The SEBI (LODR) 2015 mandates inclusion of the Business Responsibility report as partof the Annual Report for Top 500
Listed entities based on market capitalization. In compliance with the regulation wehave provided the BRR as part of our Annual Report-Annexure-7.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
It is management's responsibility to establish and maintain appropriate controls overfinancial reporting. Controls are aimed at providing reasonable assurance that externalreports and statements are in accordance with applicable accounting principles.
The Company has laid down certain guidelines processes and structure which enablesimplementation of appropriate internal financial controls across the organisation. Suchinternal financial controls encompass policies and procedures adopted by the Company forensuring the orderly and efficient conduct of business including adherence to itspolicies safeguarding of its assets prevention and detection of frauds and errors theaccuracy and completeness of accounting records and the timely preparation of reliablefinancial information. These include control processes both on manual and IT applicationsincluding the ERP application wherein the transactions are approved and recorded.Appropriate review and control mechanisms are built in place to ensure that such controlsystems are adequate and are operating effectively. Because of the inherent limitations ofinternal financial controls including the possibility of collusion or improper managementoverride of controls material misstatements in financial reporting due to error or fraudmay occur and not be detected. Also evaluation of the internal financial controls issubject to the risk that the internal financial control may become inadequate because ofchanges in conditions or that the compliance with the policies or procedures maydeteriorate.
The Company has in all material respects an adequate internal financial controlssystem and such internal financial controls were operating effectively based on theinternal control criteria established by the Company considering the essential componentsof internal control.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has established a Vigil Mechanism that enables the Directors and Employeesto report genuine concerns. The Vigil Mechanism provides for adequate safeguards againstvictimization of persons who use the Vigil Mechanism; and also provides direct access tothe Chairperson of the Audit Committee of the Board of Directors of the Company inappropriate or exceptional cases. Details of the Vigil Mechanism policy are made availableon the Company's website www.coffeeday.com
PARTICULARS OF EMPLOYEES
The Statement containing ratio of remuneration paid to each Director and the medianemployee remuneration and other details in terms of subsection 12 of section 197 of theCompanies Act 2013 read with rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
THE STATEMENT CONTAINING PARTICULARS IN TERMS OF SUBSECTION 12 OF SECTION 197 OF THECOMPANIES ACT 2013 READ WITH RULE 5(2) AND 5(3) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014 - ANNEXURE-8 CORPORATE SOCIALRESPONSIBILITY
As per section 135 of the Companies Act 2013 the Company has a Corporate SocialResponsibility Committee. The Committee comprises of Mr. S.V. Ranganath Chairman and Mr.V.G. Siddhartha & Mrs. Malavika Hegde as Members. The Committee has adopted a CSRpolicy which has been hosted on the Company's website at www.coffeeday.com
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE )PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a Prevention of Sexual Harassment policy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaints Committee has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.
During the year 2016-17 no complaints were received by the Company related to sexualharassment.
DIRECTOR'S RESPONSIBILITY STATEMENT
In Compliance with section 134(5) of the Companies Act 2013 the Board of Directorshereby confirm the following:
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;
(c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) The directors had prepared the annual accounts on a going concern basis; and
(e) The Company is responsible for establishing and maintain adequate and effectiveinternal financial controls with regard to it business operations and in the preparationand presentation of the financial statements in particular the assertions on theinternal financial controls in accordance with broader criteria established by theCompany.
Towards the above objective the directors have laid down the internal controls basedon the internal controls framework established by the Company which in all materialrespects were operating effectively as at 31st March 2017.
(f) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate. The Company has substantiallycomplied with material provisions of such acts and regulations as are relevant for itsoperations. No material or significant non compliances were reported or identified duringthe year.
None of the Directors of your Company are disqualified as per provisions of Section164(2) of the Companies Act 2013. Your Directors have made necessary disclosures asrequired under various provisions of the Act and SEBI (LODR) 2015.
BOARD'S RESPONSE ON AUDITORS QUALIFICATION RESERVATION OR ADVERSE REMARK OR DISCLAIMERMADE
There are no qualifications reservations or adverse remarks made by the StatutoryAuditors in their report or by the Company Secretary in practice in the secretarial auditreport.
STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT OF THE COMPANY
Your company is exposed to a variety of risk considering the diversified business ofthe subsidiaries which include coffee business technology park business logisticsbusiness financial services business and resort business. We conduct a substantialportion of our coffee and non-coffee business operations through our subsidiaries. Henceour company's income is largely dependent on the investment income and dividends from oursubsidiary. Our success depends on the value perception and marketing of our brands mostparticularly the "Caf Coffee Day" brand. We are also subject to strongcompetition in food & beverage industry and our logistics business.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB_SECTION _12_ OF SECTION 143OF THE ACT
There were no frauds reported by auditors.
A. Buy back of securities
The Company has not bought back any of its securities during the year under review asper Section 68 of the Act.
B. Sweat Equity
The Company has not issued any Sweat Equity Shares during the year under review as perSection 54 of the Act.
C. Bonus Shares
The Company had not issued Bonus Shares during the year under review as per Section 63of the Act.
D. Employee Stock Option Plan
The Company has not provided any Stock Option Scheme to the employee as per Section 62of the Act.
Your Directors place on record their sincere thanks to Bankers business associatesconsultants and various Government authorities for their continued support extended toyour companies activities during the year under review. Your Directors also acknowledgegratefully the shareholders for their support and confidence reposed on your company.
For and on Behalf of the Board
By Order of the Board
Date: 18th May 2017
For Coffee Day Enterprises Limited
V G Siddhartha
Chairman & Managing Director
DIN - 00136524