The Board of Directors present you the Eighth Annual Report on business and operationsalong with the audited financial statements and the auditors report of your Companyfor the financial year ended 31st March 2016.
|Financial Highlights: || || || ||Amount In Rs. million |
| || || || ||(Except per share data.) |
|Particulars ||Coffee Day Enterprises Limited (Consolidated) ||Coffee Day Enterprises Limited (Consolidated) ||Coffee Day Global Limited (Consolidated) ||Coffee Day Global Limited (Consolidated) |
| ||FY16 ||FY15 ||FY16 ||FY15 |
|Net Revenue(including other income) ||28937 ||25487 ||13865 ||12717 |
|Expenses ||29415 ||26894 ||13682 ||12788 |
|Profit before tax and exceptional items ||(478) ||(1407) ||183 ||(71) |
|Exceptional Items net ||- ||- ||- ||- |
|Tax Expenses ||329 ||150 ||77 ||71 |
|Associates ||990 ||903 ||- ||- |
|Minority Interest ||(258) ||(184) ||- ||- |
|Profit after Tax ||(75) ||(838) ||106 ||(143) |
|Earnings per Share (EPS) before exceptional item ||(0.47) ||(7.18) ||0.65 ||(0.91) |
|Earnings per Share (EPS) after exceptional item ||(0.47) ||(7.18) ||0.65 ||(0.91) |
During the fiscal year ended March 31 2016 consolidated net operational revenue grewby 14.4% YoY driven by a strong impetus from Coffee and Financial Services. The retailcoffee contributed by a growth of 14%. Consolidated Loss after tax and exceptional itemscame down from Rs.838 Million for Fy 2015 to a loss of Rs. 75 million for Fy 2016.
A detailed performance analysis is provided in the Management Discussion and Analysissegment which is annexed to this report.
State of Companys Affairs
The state of Company Affairs forms a part of the Management Discussion & AnalysisReport.
In view of the losses current and accumulated your Directors regret their inabilityto recommend dividend for the year 2015-2016.
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.
Successful Initial Public Issue
The Company has successfully completed initial public offering (IPO) in the currentyear pursuant to applicable SEBI Rules and Regulations. The IPO of the Company received anoverwhelming response from the investors and the public issue was oversubscribed therebymaking this IPO a successful one. Shares have been listed with both BSE and NSE w.e.f 02ndNovember 2015. Consequently the Companys paid up capital increased from Rs.1709407440/- to Rs.2060017190/-. The equity shares of Rs.10/- each were issued at aprice of Rs.328/- per share.
No fixed deposits accepted from the public.
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 utilised 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. The said policy is available at the Companywebsite www. coffeeday.com.
The Company has 40 subsidiaries (including indirect subsidiaries) as on March 31 2016.
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 subsidiaries companies are available on our website www. coffeeday.com postapproval of the members.
Management Discussion & Analysis Report
The Management Discussion & Analysis forms a part of this annual report.
The report on Corporate Governance as stipulated by under SEBI LODR forms part of theAnnual Report. The requisite Certificate from a practicing
Company Secretary confirming compliance with the conditions of Corporate Governance isattached to this Report as Annexure 1.
Policy on Directors Appointment and Remuneration
In accordance with Clause 178(3) of the Companies Act 2013 and Regulation 19 of SEBILODR the Board had adopted a Policy on Directors appointment and remuneration asrecommended by the Nomination and Remuneration Committee. The policy is attached as Annexure2.
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 Boardrecognises the importance of a diverse composition and has adopted a Board DiversityPolicy which sets out the approach to diversity. The policy is available at www.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 Listing Obligation and DisclosureRequirements an evaluation of the performance of the Board Committee and members wereundertaken.
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 processes and the Boards engagement with the seniormanagement team etc. The performance of the Committee was evaluated by the Board on thebasis of composition effective discharge of its function and recommendations provided.Performance of the Individual Directors were evaluated on the basis of integritycommitment and the ability to exercise independent judgement etc. The feedback wascollated and discussed and action points for improvements were put in place.
Appointments/Resignation/Re-appointments of Board of Directors
During the year no new Director has been appointed except Mr. M.D. Mallya beingappointed as an Independent Director and there is no resignation of Directors except Mr.Parag Saxena Mr. Nainesh Jai Singh Mr. H.V. Santhrupth & Mrs. Niveditha Halappaduring the financial year 2015-16.
Mr.Sanjay Nayar shall retire by rotation at the ensuing Annual General meeting and iseligible for re-appointment.
Committees of the Board
The details of the Boards Committees the Audit Committee the Nominationand Remuneration Committee and the Stakeholders Relationship Committee have beendisclosed separately in the Corporate Governance Report which is annexed to and forms apart of this annual report.
The Audit Committee comprises of Mr. S.V. Ranganath as 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 thereat are given in theCorporate Governance Report.
Meetings of the Board
The Board duly met 12 times (Twelve) in the financial year 2015-16. 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 (Listing Obligations andDisclosure Requirements) regulation 2015. The same is also available on the website of thecompany 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 (Listing Obligations and Disclosures Requirement) regulation2015 and detail of the transaction approved by the Board under section 188 of theCompanies Act 2013 have been enclosed pursuant to clause (h) of subsection (3) of Section134 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 3.
a) Statutory Auditors:
The members in their AGM held on September 30 2014 had appointed M/s B S R & CoLLP Chartered Accountants as statutory auditors for a term of 5 consecutive years.
Hence shareholders are hereby proposed to ratify the appointment of auditors fromconclusion of this AGM to the conclusion of the next AGM
b) Secretarial Auditor:
Pursuant to clause 204 of the Companies Act 2013 M/s HRB & Co was appointed toconduct the secretarial audit of the Company for the FY 2015-16. The secretarial auditreport is attached as Annexure 4
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 Companys operations in future.
Extract of Annual Return
An extract of the Annual return has been annexed to the Boards Report incompliance with Section 92 of the Companies Act 2013 read with applicable rules madethereunder annexed as Annexure 5 to this Report.
Adequacy of Internal Financial Controls with Reference to the Financial Statements
It is managements responsibility to establish and maintain appropriate controlsover financial reporting. Controls are aimed at providing reasonable assurance thatexternal reports and statements are in accordance with applicable accounting principles.
The Company has laid down certain guidelines processes and structures which enablethe implementation of appropriate internal financial controls across the organisation.Such internal financial controls encompass policies and procedures adopted by the Companyfor ensuring 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 an impropermanagement override of controls material misstatements in financial reporting due toerror or fraud may occur and not be detected. Also evaluation of the internal financialcontrols are subject to the risk that the internal financial control may become inadequatebecause of changes in conditions or that the compliance with the policies or proceduresmay deteriorate.
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. The Company has in all material respects an adequate internalfinancial controls system and such internal financial controls were operating effectivelybased on the internal control criteria established by the Company considering theessential components of 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 Companys 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 are annexed in Annexure 6 of this report.
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.
Considering the first proviso to Section 136(1) of the Companies Act 2013 the AnnualReport excluding the aforesaid information is being sent to the members of the Companyand others entitled thereto. The said information is available for inspection at theregistered office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. Any shareholder interested in obtaininga copy thereof may write to the Company Secretary in this regard.
Corporate Social Responsibility
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 Companys 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 2015-16 no complaints were received by the Company related to sexualharassment.
Directors 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 standardshad been followed along with proper explanation relating to material departures;
(b) The directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of Affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;
(c) The directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets 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 March 31 2016.
(f) The directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate. The Company hassubstantially complied with material provisions of such acts and regulations as arerelevant for its operations. No material or significant non compliances were reported oridentified during the 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 (Listing Obligations and DisclosureRequirements) Regulation 2015.
Boards Response on Auditors qualification Reservation or Adverse Remarks orDisclaimers made
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 the Development and implementation of the Risk Management Policyof the Company
Your company is exposed to a variety of risk sconsidering the diversified business ofthe subsidiaries which include a 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 companys income is largely dependent on the investment income and dividends fromour subsidiary. Our success depends on the value perception and marketing of our brandsmost particularly the "Caf Coffee Day" brand. We are also subject to strongcompetition in the food & beverage industry and our logistics business.
Details in Respect of Frauds Reported by Auditors under Sub-section (12) of Section143:
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.
b) Sweat Equity:
The Company has not issued any Sweat Equity Shares during the year under review.
c) Bonus Shares:
The Board of Directors recommended the issue of bonus shares at the ratio of 1:7 on May5th 2015 and the same was approved by the shareholders on 8th May 2015.
d) Employee Stock Option Plan:
The Company has not provided any Stock Option Scheme to the employee.
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 are grateful tothe shareholders for their support and confidence reposed on your company.
For and on Behalf of the Board
By Order of the Board
Date: 20th May 2016
For Coffee Day Enterprises Limited
V. G. Siddhartha
Chairman & Managing Director
DIN - 00063987
DIN - 00136524