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DFM Foods Ltd.

BSE: 519588 Sector: Agri and agri inputs
NSE: DFMFOODS ISIN Code: INE456C01012
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VOLUME 85
52-Week high 2280.00
52-Week low 1122.00
P/E 84.93
Mkt Cap.(Rs cr) 1,415
Buy Price 1402.80
Buy Qty 21.00
Sell Price 1415.00
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VOLUME 85
52-Week high 2280.00
52-Week low 1122.00
P/E 84.93
Mkt Cap.(Rs cr) 1,415
Buy Price 1402.80
Buy Qty 21.00
Sell Price 1415.00
Sell Qty 17.00

DFM Foods Ltd. (DFMFOODS) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting their report along with the audited accountsof the Company for the year ended 31st March 2016.

Financial Results

The financial results as compared to the previous year are as under:-

(Rs. in Lakhs)
Year ended 31st March 2016 Year ended 31st March 2015
Revenue from operations 38951 28925
Profit before interest financial expenses and depreciation 4874 3287
Interest & financial expenses 567 571
Depreciation and amortization 657 591
Profit before exceptional items and tax 3650 2125
Exceptional items - 406
Profit before tax 3650 1719
Tax expense 1146 618
Net profit for the year 2504 1101
Add Surplus brought forward 483 283
Available for appropriation 2987 1384
Appropriations
Dividend 500 250
Tax on proposed dividend 102 51
Transfer to General Reserve 250 600
Balance Carried forward 2135 483

Dividend

Your Directors have recommended the payment of dividend of Rs. 5/- per equity share ofH 10/- each for the financial year ended 31st March 2016 amounting to H 6.02Crores inclusive of dividend distribution tax of H 1.02 Crores. The dividend payment issubject to the approval of members at the ensuing Annual General Meeting. The dividendwill be paid to members whose names would appear on the Register of Members as on 15thJuly 2016.

Transfer to Reserves

The Company proposes to transfer R 2.50 Crores to the General

Reserve out of the amount available for appropriation.

Operational Review and the State of Company’s Affairs

The details on operational review and the state of Company’s affairs are providedin the Management’s Discussion and

Analysis Report forming part of this Annual Report.

Management’s Discussion and Analysis Report

Management’s Discussion and Analysis Report for the year under review asstipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is presented in a separate section forming part of theAnnual Report.

Subsidiaries Joint Ventures and Associate Companies

During the year the Company disposed off its investment in DFM Agro Limited. As at theend of the financial year the Company does not have any subsidiary Joint Ventures orAssociate Company.

Directors Responsibility Statement

Your Directors state that: a) in the preparation of the annual accounts for the yearended 31st March 2016 the applicable accounting standards have been followedand there are no material departures from the same; b) the Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at 31st March 2016 and of the profit of the Company for theyear ended on that date; c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) the Directors have prepared the annualaccounts on a going concern basis; e) the Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and are operating effectively; f) the Directors have devised proper systems toensure compliance with the provisions of all applicable laws and that such systems areadequate and operating effectively.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance andadhere to the corporate governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under the SEBI (Listing

Obligations and Disclosure Requirements) Regulations 2015 forms an integral part ofthis Report. The requisite certificate from the auditors of the Company confirmingcompliance is attached to the report on Corporate Governance.

Contracts and Agreements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the normal course of business and on an arm’slength basis. During the year the Company had not entered into any contract / arrangement/ transaction with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions. Prior omnibusapproval is obtained for related party transactions which are of repetitive nature andentered in the ordinary course of business and at arm’s length. All related partytransactions are placed before the Audit Committee for review and approval. The policy onmateriality of related party transactions and dealing with related party transactions asapproved by the Board may be accessed on the Company’s website at the linkhttp://www.dfmfoods.com/download/corporate/policy-on-related-party-transactions-and-materiality-of-related-party-transactions.pdfYour Directors draw attention of the members to Note 34 to the financial statement whichsets out related party disclosures.

Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee of the Board has formulated andrecommended a CSR Policy to the Board indicating the activities to be undertaken by theCompany. The same has been approved by the Board.

The CSR Policy can be accessed at the following weblink http://www.dfmfoods.com/download/corporate/CSR-Policy.pdf

The Company has spent a sum of H 25.00 Lakhs during the year on CSR activities whichamounts to 2.02% of the average net profits of last three financial years.

The Annual Report on CSR activities is enclosed as Annexure 1.

Risk Management

Your Directors continually evaluate the risks faced by the Company which could affectits business operations or threaten its existence. The Company takes appropriate riskcontainment measures and manages the same on an ongoing basis.

Internal Financial Controls

The Company has in place adequate financial controls with reference to financialstatements. During the year such controls were tested and no reportable materialweaknesses in the design or operation were observed.

Directors and Key Managerial Personnel

Directors

Mr. Mohit Jain retires by rotation at the ensuing annual general meeting and beingeligible offers himself for re-appointment. The Company has received declarations from allthe Independent Directors of the Company confirming that they meet the criteria ofIndependence as prescribed both under the Companies Act 2013 and the SEBI (ListingObligations and

Disclosure Requirements) Regulations 2015.

The Company has devised a policy for performance evaluation of Independent DirectorsBoard Committees Board and other individual Directors which include criteria forperformance evaluation of the Non-executive Directors and Executive Directors. Thepolicies relating to selection of Directors determining their independence and theremuneration policy for Directors and key managerial personnel is attached as Annexure 2.

The details of programmes for familiarization of Independent Directors with the Companyare put up on the website of the Company at the following weblink:http://www.dfmfoods.com/download/corporate/familarization-programme-for-independent-Directors.pdf

Key Managerial Personnel

Mr. Raju Singh Tomer has been appointed as Company

Secretary of the Company with effect from 10th February 2016 in place ofMr. Parvinder Singh Arora who ceased to be the Company Secretary on 31stDecember 2015.

Employees Stock Option Scheme

During the financial year the Company had granted 200000 Employee Stock options to 2employees. Out of them 1 employee resigned from the services of the Company during theyear and as such 100000 unvested options granted to him stands terminated. The Companyhas received a certificate from the Auditors of the Company that the Scheme has beenimplemented in accordance with the SEBI Guidelines and the resolution passed by themembers. The certificate would be placed at the Annual General Meeting for inspection bymembers.

The applicable disclosures as stipulated under the SEBI Guidelines as on March 31 2016with regard to the Employee Stock Option Plan – 2014 of the Company are provided in

Annexure 3 to this Report.

Auditors and Auditors’ Report

Statutory Auditor

M/s. Deloitte Haskins & Sells (Firm Registration No. 015125N)

Chartered Accountants had been appointed as statutory auditors of the Company from theconclusion of the 21st Annual General Meeting of the Company held on 31stJuly 2014 till the conclusion of the 4th consecutive Annual General Meetingtherefrom subject to ratification of their appointment at every Annual General Meeting.The Notes on financial statements referred to in the Auditors’ Report areself-explanatory and do not call for any further comments. The Auditors’ Report doesnot contain any qualification reservation or adverse remark.

Secretarial Auditor

The Board had appointed Mrs. Sunita Mathur Practicing Company Secretary to conductthe Secretarial Audit for the Financial Year 2015-16. The Secretarial Audit Report isannexed as Annexure

4. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.

Public Deposits

During the year under review your Company has not accepted any public deposit underChapter V of the Companies Act 2013.

Disclosures

CSR Committee

The CSR Committee comprises Mr. Mohit Jain as Chairman Mr. Mohit Satyanand and Mr.Sarat Chandra Nanda as members.

Audit Committee

The Audit Committee comprises of Independent Directors namely Mr. Pradeep Dinodia asChairman Mr. Mohit Satyanand and Mr. Sarat Chandra Nanda as members.

Vigil Mechanism

The Company promotes ethical behaviour in all its business activities and has put inplace a mechanism for reporting illegal or unethical behaviour. The Company has a VigilMechanism and Whistle Blower Policy under which the employees are free to reportviolations of applicable laws and regulations and the Code of Conduct. Employees may alsoreport to the Chairman of the Audit Committee.

Meetings of the Board

Five Board meetings were held during the year. For further details please refer to theReport on Corporate Governance which forms part of this Annual Report.

Particulars of Loans and Guarantees given Securities provided and investments made

The Company has neither given any loans or guarantees nor provided any securitiescovered under the provisions of Section 186 of the Companies Act 2013.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo are provided in Annexure 5 to this Report.

Extract of Annual Return

The extract of Annual Return of the Company is provided in Annexure 6 to this Report.

Particulars of Employees and Related Disclosures

Disclosures relating to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given in Annexure 7A.

A statement showing the names and other particulars of the employees drawingremuneration in excess of the limits specified in terms of the provision of Section197(12) of the Companies Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are attached as Annexure 7B.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company.

3. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the

Regulators or Courts or Tribunals which impact the going concern status andCompany’s operations in future.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

Acknowledgement

Your Directors would like to place on record their sincere gratitude for the assistanceand cooperation received from all the banks. They also wish to place on record theirappreciation for the loyal and devoted services rendered by all categories of employees.

On behalf of the Board
Place: New Delhi Mohit Jain
Date: 11th May 2016 Chairman

ANNEXURE - 1 TO DIRECTORS’ REPORT

Annual Report on Corporate Social Responsibility (CSR) activities for the FinancialYear 2015-16

1. A brief outline of the Company’s CSR policy including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs. Refer section "Corporate Social Responsibility" column in the report
2. The Composition of the CSR Committee. Mr. Mohit Jain Chairman ;
Mr. Mohit Satyanand Member; and
Mr. Sarat Chandra Nanda Member
3. Average net profit of the Company for last three financial years Rs. 1240.33 Lakhs
4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above) Rs. 24.81 Lakhs
5. Details of CSR spent during the financial year.
a. Total amount to be spent for the financial year; Rs. 24.81 Lakhs
b. Amount unspent if any; Not applicable
c. Manner in which the amount spent during the financial year Details given below

 

CSR project or activity identified Sector in which the Project is covered Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs was undertaken Amount outlay (budget) project or programs wise (H) Amount spent on the projects or programs Sub – heads: (1) Direct expenditure on projects or programs (2) Overheads (H) Cumulative expenditure upto to the reporting period (H) Amount spent: Direct or through implementing agency*
i Rural Development Project Eradicating Hunger poverty and malnutrition Odisha -Sundergarh Deogarh & Sambalpur Distt. 10.00 Lakhs (1) 10.00 Lakhs (2) Nil 10.00 Lakhs Through Implementing agency – Atmashakti Trust*
ii Promoting education and healthcare Education Chattisgarh Raigarh Distt. 3.00 Lakhs (1) 3.00 Lakhs (2) Nil 3.00 Lakhs Through Implementing agency – Tapaswini Nav Sadhna**
iii Promoting education Education Uttar Pradesh - Bijnor 12.00 Lakhs (1)12.00 Lakhs (2) Nil 12.00 Lakhs Through Implementing agency - Shri Vardhaman Educational Society***
Total 25.00 Lakhs 25.00 Lakhs 25.00 Lakhs

*Atmashakti Trust is a registered trust which was established in 1995 to supportdevelopment initiatives in rural areas as well as urban slums.

** Tapaswini Nav Sadhna is a Registered Society which was established in 2006 forproviding education health facilities and vocational training to uplift the poor. ***Shri Vardhaman Educational Society is a Registered Society which was established in theyear 1960 to promote education by establishing school/ colleges etc.

6. In case the Company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof the Company shall provide the reasons for not spending the amount in its Board report. Not Applicable

Responsibility Statement:

The implementation and monitoring of Corporate Social Responsibility (CSR) Policy isin compliance with CSR objectives and policy of the Company.

(Mohit Jain)

Managing Director and Chairman of CSR Committee

ANNEXURE - 2 TO DIRECTORS’ REPORT

Policy for Selection of Directors and determining Directors independence andremuneration policy for Directors / Key Managerial Personnel and other Employees

Introduction

DFM Foods believes that the Board should be able to effectively develop a long termvision for the Company provide guidance in effectively implementing its policies andmanaging operations efficiently and ensuring the compliance of all prevailing laws.Further the Board constitution should ensure that its members have diversified expertiseand experience so that the Board is able to discharge its duties and responsibilitieseffectively.

Policy for Selection of Directors

• In evaluating the suitability of individual Board members the Nomination &Remuneration Committee (NRC) may take into account factors such as:

• Educational and professional background;

• General understanding of the Company’s business dynamics;

• Standing in the profession;

• Personal and professional ethics integrity and values; and

• Willingness to devote sufficient time and energy in carrying out their dutiesand responsibilities effectively.

• Criteria of Independence

The NRC shall assess the independence of Directors at the time of appointment /re-appointment. The Board shall re-assess determinations of independence when any newinterests or relationships are disclosed by a Director;

Independent Directors shall also fulfill the criteria prescribed under Section 149 readwith Schedule IV of the Companies Act 2013 and under Regulation 16 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015; and

The Independent Directors shall abide by the "Code for Independent Directors"as specified in Schedule IV to the Companies Act 2013.

Remuneration Policy

Introduction

DFM Foods has developed its remuneration policy for Directors Key Managerial Personneland other employees on the following principles:-a) The remuneration should be at levelswhere it should be possible to attract retain and motivate all personnel. b) Theremuneration consists of both fixed and variable pay which is linked to the businessobjectives of the Company. c) Ensuring that the relationship between remuneration andperformance is clear and measurable to the extent possible.

Remuneration to Non-Executive Directors

The remuneration to Non-Executive Directors is paid only in the form of sitting fees.

The Nomination and Remuneration Committee recommends the sitting fees to be paid forboth the Board and Committee there of after considering the provisions of the CompaniesAct 2013 and prevailing corporate practices. Thereafter the Board approves the same.

Remuneration to Executive Directors and Key Managerial Personnel

The Board on the recommendation of the Nomination and Remuneration Committee reviewsand approves the remuneration payable to the Executive Directors and Key ManagerialPersonnel.

The Board and NRC considers the provisions of the Companies Act 2013 the limitsapproved by the shareholders and the individual and corporate performance in recommendingand approving the remuneration to the Executive Directors and Key Managerial Personnel.

Remuneration to other employees

Employees are assigned grades according to their qualifications experiencecompetencies role and responsibility in the organization.

Individual remuneration is determined within the grade and based on various factorssuch as job profile skill set seniority experience and prevailing remuneration levelsfor equivalent jobs.

ANNEXURE - 3 TO DIRECTORS’ REPORT

Disclosure with respect to Employee Stock Option Plan – 2014 of the Company

The Company introduced Employee Stock Option Plan – 2014 in the Financial Year2014-15 after approval by the Shareholders by way of Special Resolution dated 31stJuly 2014. The first grant was made on 1st April 2015 by the Nomination andRemuneration

Committee (also known as Compensation Committee) as per the terms & conditions ofEmployee Stock Option Plan – 2014. The Company calculates employee compensation costusing intrinsic value of option.

The relevant information with respect to Company’s stock option plan as on 31stMarch 2016 is given below:

Details of Options
Date of Grant 1st April 2015
Total Number of Options Granted 200000
Exercise price per option H 291.00
Options vested 20000
Options exercised N.A.
Total Number of Shares arising as result of exercise of options N.A
Options Lapsed 100000
Variation in terms of options N.A
Money realized by exercise of options N.A.
Total number of options in force 100000
Pricing formula Intrinsic value
Employee wise details of options Granted to:
Senior managerial personnel:
Mr. Rajiv Raina Executive Director 100000
Mr. Shailesh Kumar Khurana Chief Operating Officer* 100000
Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year None
Employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. None

*Since ceased to be in employment of the Company.

Difference between intrinsic value and fair value of stock options and impact of thisdifference on net profit and EPS for the year:

(In H Lakhs)
Pro forma adjusted Net Income (Loss) and Earning per Share
Net Profit as reported 2504
Add: Intrinsic Value compensation cost 9
Less: Fair Value compensation cost 39
Adjusted pro forma Net Profit 2474

 

Earnings Per Share (in Rs.)
Particulars Basic Diluted
As reported 25.04 25.03
Adjusted pro forma 24.74 24.73

Weighted average exercise price and Weighted average fair value of Options Grantedduring the year: -

Particulars Exercise Price (Rs.) Fair Value (Rs.)
Exercise price equals Market price N.A. N.A.
Exercise price is greater than Market price N.A. N.A.
Exercise price is less than Market price 291.00 194.96

Description of method and significant assumptions used to estimate the fair value ofoptions granted during the year:

The Company is following intrinsic value of method to amortize the compensationexpense. The fair value of options granted during the year has been estimated usingBlack-Scholes Option Pricing Model after considering the following assumptions:

Underlying Price 327.68
Exercise Price 291.00
Option life (Years) 3.5
Historical Volatility 59.12%
Risk Free Rate 7.71%
Dividend Yield 0.76%

ANNEXURE - 4 TO DIRECTORS’ REPORT

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31st MARCH 2016

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules 2014]

CIN: L15311DL1993PLC052624

To

The Members DFM FOODS LIMITED

8377 ROSHANARA ROAD

DELHI-110007

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by DFM Foods Ltd (hereinaftercalled the "Company"). The Secretarial Audit was conducted in a manner thatprovided me a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing my opinion thereon.

Based on my verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit I hereby report that in my opinion the Company hasduring the audit period covering the financial year ended on March 31 2016 complied withthe statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter: I have examined the books papers minute books formsand returns filed and other records maintained by the Company DFM Foods Limited for thefinancial year ended on March 31 2016 according to the provisions of:

(i) The Companies Act 2013 (the Act) and the Rules made under the Act;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the Rulesmade under the Act;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed under the Act;(iv) The Foreign Exchange Management Act 1999 and the rules and regulations made underthe Act to the extent applicable to Overseas Direct Investment (ODI) Foreign DirectInvestment (FDI) and External Commercial Borrowings (ECB).

(v) The Regulations and Guidelines prescribed under the Securities and Exchange Boardof India Act 1992 (‘SEBI Act’) viz:-

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;

c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;

d) The Securities and Exchange Board of India (Share Based Employee Benefits)Guidelines 2014;

e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations2008;

f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;

g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009; and

h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998;

(vi) and other applicable laws specifically applicable to the Industry to which theCompany belongs as identified by the Management that is to say:

Food Safety and Standard Act 2006 Rules and Regulations

Legal Metrology Act 2009

I have also examined compliance with the applicable clauses of the following:

I) Secretarial Standards issued by The Institute of Company Secretaries of India.

II) Listing agreement entered into by the Company with BSE Limited ("BSE")During the period under review the Company has complied with the applicable provisions ofthe Acts Rules Regulations

Guidelines Standards Listing Agreement etc. mentioned above

I further report that

The Board of Directors is duly constituted with proper balance of Executive DirectorsNon Executive Directors Women Director and Independent Directors. The change in thecomposition of the Board of Directors that took place during the period under review wascarried out in compliance with the provisions of the Act. Adequate notice is given to allDirectors to schedule the Board Meetings agenda and detailed notes on agenda were sent atleast seven days in advance and a system exists for seeking and obtaining furtherinformation and clarifications on the agenda items before the meeting and for meaning fulparticipation at the meeting.

Majority decisions are carried through while the dissenting members’ views arecaptured and recorded as part of the minutes. I further report that there are adequatesystems and processes in the Company commensurate with the size and operations of theCompany to monitor and ensure compliance with applicable laws rules regulations andguidelines.

I further report that during the audit period the Company has received the Open offerfor acquisition of 2610836 equity shares (as defined below) from the equity shareholdersof DFM Foods Limited ("Target Company") by Aravali Investment Holdings("Acquirer") along with Jwalamukhi Investment Holdings (PAC1) and WestbridgeCrossover Fund LLC (PAC2) as the Persons Acting in Concert with the Acquirer("persons acting in concert" / "PACS"). pursuant to and in compliancewith amongst others

Regulation 3(1) and other applicable regulations of the Securities and Exchange Boardof India (Substantial Acquisition of Shares and Takeovers) Regulations 2011 andsubsequent amendments thereto (the "SEBI (SAST) Regulations")

SunitaMathur
Company Secretary in Practice
Place: New Delhi FCS No.: 1743
Date: 11th May 2016 C P No.: 741

Note: This report is to be read with our letter of even date which is annexed asAnnexure A and forms an integral part of this report.

To

The Members DFM FOODS LIMITED

8377 ROSHANARA ROAD

DELHI-110007

Our report of even date is to be read alongwith this letter

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.

Sunita Mathur
Company Secretary in Practice
Place: New Delhi FCS No.: 1743
Date: 11th May 2016 C P No.: 741

ANNEXURE - 5 TO DIRECTORS’ REPORT

Conservation of Energy Technology Absorption and Foreign Exchange Earnings And Outgo

The details of conservation of energy technology absorption foreign exchange earningsand out go are as follows:

A) Conservation of energy:

(i) The steps taken or impact on conservation of energy:

Introduction of variable frequency drives in the air handling units of the airconditioning plant.

Changing of the Sewage Treatment Plant blower motor to a VFD motor.

Conversion of normal CFL lighting to LED.

Installation of an air compressor which is more energy efficient.

Installation of an energy efficient chiller for the air conditioning plant for the newline.

(ii) The steps taken by the Company for utilising alternate sources of energy: Work hasbeen taken up to use solar energy in the Greater Noida factory.

(iii) The capital investment on energy conservation equipments: The capital investmenton energy conservation formed part of the new capital expenditure incurred.

B) Technology absorption:

(i) The efforts made towards technology absorption: a) Development of a semi-automatedgift sorting conveyor. b) Development of a new flavour. c) Development of a new carton forpackaging. d) The commissioning of the new extrusion line. (ii) The benefits derived likeproduct improvement cost reduction product development or import substitution: a) Theuse of the gift sorting conveyor resulted in lower manpower costs and higher efficiency.b) The new flavour launch has given a wider choice to the consumer there by helping in thegrowth of sales. c) The new carton development has lowered costs. d) The new extrusionline is more efficient in output energy consumption and packaging accuracy. (iii) In caseof imported technology (imported during the last three years reckoned from the beginningof the financial year) Not Applicable

(iv) The expenditure incurred on Research and

Development:

As Research & Development is part of the ongoing quality control and manufacturingcosts the expenditure is not separately allocated and identified.

C) Foreign exchange earnings and Outgo:

( Rs. in Lakhs)
Foreign Exchange earned in terms of actual inflows NIL
Foreign Exchange outgo in terms of actual outflows 1974.00

ANNEXURE - 7A TO DIRECTORS’ REPORT

Details Pertaining to Remuneration as Required Under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2015-16 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2015-16 and the comparison of remuneration of each Key Managerial Personnel (KMP) againstthe performance of the Company are as under:

Sl. No. Name of Director / KMP and Designation Remuneration of Director/ KMP for financial year 2015-16 (H In Lakhs) % increase in Remuneration in the financial year 2015-16 Ratio of Remuneration of each Director/ to median remuneration of employees Comparison of the Remuneration of the KMP against the performance of the Company
1 Mr. Mohit Jain Chairman and Managing Director 151.80 90.83% 67.44 Profit before Tax increased by 112.33% and Profit After Tax increased by 127.43% in financial year 2015-16
2 Mr. Rohan Jain Deputy Managing Director 153.17 63.91% 68.05
3 Mr. Pradeep Dinodia Independent Director 6.50 18.18% 2.89
4 Mr. Sarat Chandra Nanda Independent Director 6.00 - 2.67
5 Mr. Mohit Satyanand Independent Director 12.00 20.00% 5.33 Not Applicable
6 Mr. Sandeep Singhal Non-Executive Director - N.A. NIL
7 Ms. Hiroo Mirchandani Independent Director 4.50 N.A. 2.00
8 Mr. Davinder Dogra Chief Financial Officer 51.96 N.A. 23.08 Profit before Tax increased by 112.33% and Profit After Tax increased by 127.43% in financial year 2015-16
9 Mr. Parvinder Singh Arora Company Secretary* - - N.A.
10 Mr. Raju Singh Tomer Company Secretary* 2.78 - N.A.

(ii) The median remuneration of employees of the Company during the financial year wasH 2.25 Lakhs; (iii) In the financial year there was an increase of 9.52% in the medianremuneration of employees; (iv) There were 491 permanent employees on the rolls of Companyas on 31st March 2016;

(v) Relationship between average increase in remuneration and Company performance: TheProfit before Tax for the financial year ended 31st March 2016 increased by112.33% whereas the increase in median remuneration was 9.52%. The average increase inmedian remuneration was in line with the performance of the Company;

(vi) Comparison of Remuneration of the Key Managerial

Personnel(s) against the performance of the Company: The total remuneration of KeyManagerial Personnel increased by 85% from H 201.32 Lakhs in 2014-15 to H372.46 Lakhs in 2015-16 where as the Profit before Tax increased by 112.33% to H3650 Lakhs in 2015-16 (H 1719 Lakhs in 2014-15); vii) a) Variations in the marketcapitalisation of the Company: The market capitalisation as on 31st March 2016was H 1461.24 Crores (335.36 Crores as on 31st March 2015). b) Price Earningsratio of the Company was 58.35 as at 31st March 2016 and was 30.45 as at 31stMarch 2015. c) Percent increase over/ decrease in the market quotations of the shares ofthe Company as compared to the rate at which the Company came out with the last publicoffer in the year: The Company had come out with initial public Issue in 1995. An amountof H 1000/- invested in the said Public Issue would be worth H 146100/- as on 31stMarch 2016 indicating a Compounded Annual

Growth Rate of 26.79%. This is excluding the dividend accrued thereon; (viii) Averagepercentage increase made in the salaries of employees other than the managerial personnelin the last financial year i.e. 2015-16 was 10.98% whereas the increase in the managerialremuneration for the same financial year was 76.29%; (ix) The key parameters for thevariable component of remuneration availed by the Directors are considered by the Board ofDirectors based on the recommendations of the Nomination and Remuneration Committee as perthe Remuneration Policy for Directors Key Managerial

Personnel and other Employees;

(x) The ratio of the remuneration of the highest paid Director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid Directorduring the year: There was no employee (employed during the year) who was drawing a salaryin excess of that drawn by the highest paid Director; and (xi) It is hereby affirmed thatthe remuneration paid is as per the Remuneration Policy for Directors Key ManagerialPersonnel and other Employees.

ANNEXURE - 7B TO DIRECTORS’ REPORT

Pursuant to Section 197 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 in Respect of Employees of the Company:

Sl. No Name Designation Remunera- tion (H) Qualifications Expe- rience (In years) Date of commencement of employment Age Last employment Percentage of equity shares held Relationship with Directors
1 Jain Mohit Chairman & Managing Director 15180000 B.A. Honours (Economics) 41 17.03.1993 61 The Delhi Flour Mills Co. Limited 1.71 Father of Mr. Rohan Jain Dy. Managing Director
2 Jain Rohan Dy. Managing Director 15316800 B.Sc. (Economics) 11 01.06.2009 33 The Delhi Flour Mills Co. Limited 0.19 Son of Mr. Mohit Jain Chairman & Managing Director
3 Khurana Shailesh Kumar* Chief Operating Officer 6966944 MBA 21 26.12.2014 45 Godfrey Phillips India Limited NIL N.A.
4 Raina Rajiv Executive Director 13591987 MBA 32 01.09.1995 56 The Delhi Flour Mills Co. Limited NIL N.A.

*Mr. Shailesh Kumar Khurana held office upto 9th October 2015

Note : Employment of all the above mentioned persons is contractual in nature.

For and on behalf of the Board
Place: New Delhi (Mohit Jain)
Date: 11th May 2016 Chairman & Managing Director