Your Directors have pleasure in presenting the 21st Annual Report and theAudited Accounts of Future Consumer Limited (formerly known as Future ConsumerEnterprise Limited) ["Company"] for the year ended 31stMarch 2017.
The summarized financial performance (Standalone and Consolidated) of the Company for2016-17 and 2015-16 is given below:
| || || || ||(Rs. in Lakhs) |
| ||Standalone ||Consolidated |
| ||2016 - 17 ||2015 - 16 ||2016 - 17 ||2015 - 16 |
|Total Income ||167943.97 ||136647.85 ||214088.17 ||172939.82 |
|Profit / (Loss) before Tax & Exceptional Items ||795.25 ||(5876.11) ||(4274.38) ||(8766.79) |
|Less: Exceptional Items ||- ||- ||- ||- |
|Profit / (Loss) before Tax ||795.25 ||(5876.11) ||(4274.38) ||(8766.79) |
|Profit / (Loss) After Tax ||777.67 ||(5849.41) ||(4363.32) ||(8746.26) |
|Profit / (Loss) After Share of Associates and Minority Interest ||NA ||NA ||(6100.55) ||(10768.22) |
During the year under review your Company has exhibited robust growth especiallyunder the backdrop of relatively weak growth exhibited by other industry peers. YourCompany offers products across categories such as basic foods ready to eat mealssnacks frozen and processed food products beverages personal care and home care underits strong own portfolio of brands. Your Company continues to focus on food and FMCGbusiness and for developing its portfolio of brands under this category has entered intojoint venture arrangements with leading market players locally as well as globally. Duringthe year under review your Company has entered into joint venture with a local unit of USorganic food company Hain Celestial Group Inc. to introduce products under health andwellness category. Your Company has also launched a personal care brand "SwissTempelle" by entering into a joint venture arrangement with Mibelle A.G. a divisionof Migros Group Switzerland. Our oats business under brand "Kosh" continues toredefine the way oats is consumed by the consumers bringing it to the Centre of Plate.
The Company also joined hands and has entered into joint venture arrangement with LTFoods Limited a leading company in India undertaking the business of rice. The Companyhas through a joint venture entity set up a Rice Mill at India Food Park at TumkurKarnataka for manufacturing marketing and distribution of Sona Masoori a regional SouthIndian rice.
During the last fiscal 2015-16 your Company had acquired the business of wet wipes andhand sanitizer wipes from Grasim Industries Limited which are primarily marketed under thebrand name "Kara". The business has shaped up well during the year under reviewand your Company has also extended the brand with the launch of nail polish wipes.
Your Company has also taken significant steps to expand its distribution network bothwithin and outside the Future Group. The product launches are extremely well supported byfocused marketing initiatives and enhancement of our sourcing and manufacturing abilities.
Your Company has recorded total income of Rs. 1679.44 Crore and EBIDTA profit of Rs.31.68 Crore for the financial year under review as against total income of Rs. 1366.48Crore and EBIDTA loss of Rs. 5.08 Crore in the previous financial year. In view ofinadequate profits during the financial year 2016-17 no appropriation is proposed to bemade towards Reserves. Save and except those mentioned in this Report there were nomaterial changes and commitments affecting the financial position of the Company betweenthe end of financial year under review and the date of this Report.
Indian Economy is in a good shape and is expected to grow handsomely between ~7% to 8%over coming years making it one of the fastest growing major economies in the world.Inflation is largely expected to remain within comfortable range owing to favorablemonsoon and structural initiatives by Government. Timely implementation of variousGovernment reforms such as GST long term positive impact of demonetizationdigitalization are expected to boost the economic growth.
India continues to benefit from the growing domestic demand from the young populationwhose consumption is driving the expansion of the middle class. By 2025 India is expectedto become the third largest consuming class Country. Even a conservative 6% to 7% GDPgrowth is expected to lead to consumption expenditure rising to $4 trillion by 2025. Innominal terms India's consumption expenditure is estimated to grow at ~12% which is morethan double the global growth rate of 5%. The growth is largely driven by risingprosperity nuclear families and rapid urbanization witnessed in the Country. Nuclearfamilies have been increasing in the Country over past few years. The proportion ofnuclear families is expected to increase from 70% at present to 74% by 2025. Typicallynuclear families spend 20% to 30% more on per capita basis than joint families
[Source : BCG publication (March 2017)]. India's urbanization is also estimated tospread across the Country rather than being concentrated in certain areas. This may leadto creation of consumption centres throughout the Country.
The Indian branded FMCG sector is pegged at about $65 billion
[Source : CII-BCG white paper (December 2015)] and has been growing at a robustpace. It is estimated that the sector will continue to grow by 13 - 14% in the next 5 - 10years and is likely to become a $220-240 billion industry by 2025.
In terms of the provisions of Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI Listing Regulations") detailsabout unclaimed shares in suspense account as on 31st March 2017 are as under:
|Description ||No. of Shareholders ||No. of Shares |
|Aggregate number of shareholders and outstanding shares in the suspense account as on 1st April 2016 ||3 ||21600 |
|Aggregate number of shareholders who approached the Company for transfer from suspense account upto 31st March 2017 ||1 ||3000 |
|Number of shareholders to whom shares were transferred from suspense account upto 31st March 2017 ||1 ||3000 |
|Aggregate number of shareholders and outstanding shares in the suspense account as on 31st March 2017 ||2 ||18600 |
The Company has opened separate suspense accounts with National Securities DepositoryLimited and Central Depository Services (India) Limited and has credited the saidunclaimed shares to these suspense accounts.
The voting rights in respect of shares maintained under the suspense account shallremain frozen till the rightful owner makes any claim over such shares.
Pursuant to the Composite Scheme of Arrangement and Amalgamation 1 equity share ofFuture Lifestyle Fashions Limited ("FLFL") has been allotted toshareholders of Future Consumer Limited for every 31 shares held by them. Accordingly600 shares of FLFL arising out of 18600 unclaimed shares are also lying in thesesuspense accounts as on 31st March 2017.
To conserve the funds for future business growth your Directors have not recommendedany dividend on equity shares in respect of the financial year 2016-17.
In terms of the provisions of Regulation 43A of SEBI Listing Regulations the Companyhas adopted a Dividend Distribution Policy. The Dividend Distribution Policy is annexed tothis Report as Annexure I and is also available on the website of the Company -http://futureconsumer.in/policies-and-code.html.
INCREASE IN SHARE CAPITAL
During the year under review your Company has issued and allotted 5050000 equityshares of the Company to eligible employees on exercise of options granted under FVILEmployees Stock Option Scheme 2011. The Company has also issued 100 equity shareseach to Black River Food 2 Pte. Ltd. and International Finance Corporation in terms ofthe preferential allotment(s) made by the Company.
Consequent to the aforesaid the issued subscribed and paidup capital of theCompany increased from 1657442038 equity shares of Rs. 6/- each to 1662492238equity shares of Rs. 6/- each.
ISSUE OF CONVERTIBLE SECURITIES
During the year under review your Company has issued and allotted 29985 and 13400Compulsorily Convertible Debentures ("CCDs") having face value of Rs.100000/- each to Black River Food 2 Pte. Ltd. and International Finance Corporation(Individually referred as "Investor" and collectively as "Investors")respectively on preferential allotment basis. The CCDs carry a coupon of 8.50% p.a.compounded on a quarterly basis. The CCDs shall automatically and compulsorily beconverted into equity shares at a conversion price of Rs. 22.73 per equity share on theearlier of occurrence of following events a) Investors electing to convert the CCDsinto equity shares and b) the date that is 18 months from the date of issue of CCDs. TheInvestors are also entitled to such number of equity shares equivalent to the amount ofcoupons remaining unpaid if any at a conversion price of Rs. 22.73 for each equityshare.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As at 31st March 2017 your Company had following Subsidiaries / JointVentures / Associate Companies:
|Sr. No. ||Name of the company ||Category |
|1. ||Future Food and Products Limited ||Subsidiary |
|2. ||Future Consumer Products Limited ||Subsidiary |
|3. ||Aadhaar Wholesale Trading and Distribution Limited ||Subsidiary |
|4. ||Amar Chitra Katha Private Limited ("ACKPL") ||Subsidiary |
|5. ||ACK Media Direct Limited ||Subsidiary of ACKPL |
|6. ||IBH Books & Magazines Distributors Limited ||Subsidiary of ACKPL |
|7. ||Ideas Box Entertainment Limited ||Subsidiary of ACKPL |
|8. ||FCEL Food Processors Limited ||Subsidiary (With effect from 27th April 2016) |
|9. ||Star and Sitara Wellness Limited ||Subsidiary |
|10. ||Express Retail Services Private Limited ||Subsidiary |
|11. ||Future Food Processing Private Limited ||Subsidiary |
|12. ||The Nilgiri Dairy Farm Private Limited ("NDFPL") ||Subsidiary |
|13. ||Appu Nutritions Private Limited ||Subsidiary of NDFPL |
|14. ||Nilgiris Franchise Private Limited ||Subsidiary of NDFPL |
|15. ||Nilgiri's Mechanised Bakery Private Limited ||Subsidiary of NDFPL |
|16. ||Integrated Food Park Private Limited ||Subsidiary |
|17. ||Sublime Foods Private Limited ("Sublime") ||Subsidiary |
|18. ||Avante Snack Foods Private Limited ||Subsidiary of Sublime (With effect from 1st September 2016) |
|19. ||Bloom Fruit and Vegetables Private Limited ||Subsidiary |
|20. ||Aussee Oats India Private Limited ||Subsidiary |
|21. ||MNS Foods Private Limited ||Subsidiary |
|22. ||Aussee Oats Milling (Private) Limited ||Subsidiary |
|23. ||FCEL Overseas FZCO ||Subsidiary |
|24. ||Genoa Rice Mills Private Limited ||Joint Venture (With effect from 25th January 2017) |
|25. ||Mibelle Future Consumer Products A.G. ||Joint Venture |
During the year under review a) Genoa Rice Mills Private Limited ("Genoa")became a subsidiary of the Company. Consequent to issue of shares to LT Foods Limitedjoint venture partner Genoa has become a joint venture of the Company with effect from 25thJanuary 2017. b) Consequent to preferential allotment made by Sarjena Foods PrivateLimited ("Sarjena") to its promoters the shareholding of the Company inSarjena has reduced from 21.26% to 19.59%. Accordingly in terms of the provisions of theCompanies Act 2013 Sarjena has ceased to be an associate of the Company with effect from3rd January 2017.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of Subsidiaries Associates and JointVenture companies in Form AOC-1 is attached separately to this Annual Report.
The performance financial position and contribution of each of the SubsidiariesAssociates and Joint Venture companies to the performance of the Company is providedunder Management Discussion and Analysis Report which is presented separately and formspart of this Report.
The policy for determining material subsidiaries as approved by the Board of Directorsof the Company is made available on the website of the Company - http://futureconsumer.in/policies-and-code.html.
In accordance to the provisions of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein standalone and the consolidated financialstatements of the Company and the audited financial statements of each of the subsidiarycompanies have been placed on the website of the Company - www.futureconsumer.in.
The audited financial statements in respect of each subsidiary company shall also bekept open for inspection at the Registered Office of the Company during working hours fora period of 21 days before the date of ensuing Annual General Meeting. The aforesaiddocuments relating to subsidiary companies can be made available to any Member interestedin obtaining the same upon a request in that regards made to the Company.
Pursuant to the Companies (Indian Accounting Standards) Rules 2015 ("INDAS") notified by the Ministry of Corporate Affairs the Company has adopted theIndian Accounting Standards with effect from 1st April 2016.
Accordingly the Standalone and Consolidated Financial Statements of the Company andits subsidiaries for the year ended 31st March 2017 and 31stMarch 2016 (including transition date balance sheet as at 1st April 2015)have been prepared in accordance with IND AS.
The reconciliation of transition from Indian GAAP to IND AS has been provided in NoteNo. 50 under Notes forming part of the Standalone Financial Statements. The auditedConsolidated Financial Statements prepared in accordance with IND AS are provided in thisAnnual Report.
PARTICULARS OF LOANS GRANTED GUARANTEE PROVIDED AND INVESTMENTS MADE PURSUANT TO THEPROVISIONS OF SECTION 186 OF THE COMPANIES ACT 2013
Details of loans granted guarantees provided and investments made by the Company underthe provisions of Section 186 of the Companies Act 2013 are provided in the Notes toStandalone Financial Statements of the Company.
RELATED PARTY TRANSACTIONS
All transactions with related parties are placed before the Audit Committee for reviewand approval. Prior omnibus approval is obtained for transactions with related partieswhich are repetitive in nature. The policy on materiality of related party transactionsand dealing with related party transactions ("RPT Policy") as approved bythe Board is available on the website of the Company -http://futureconsumer.in/policies-and-code.html. All transactions entered into withrelated parties during the financial year under review were in the ordinary course ofbusiness and on arm's length basis. During the year under review the Company has notentered into any material related party transactions as defined under the RPT Policy ofthe Company. Accordingly the disclosure in respect of contracts or arrangements withrelated parties as required under Section 134(3)(h) of the Companies Act 2013 in FormAOC-2 is not applicable.
INTERNAL FINANCIAL CONTROLS
Your Company has put in place adequate policies and procedures to ensure that thesystem of internal financial control is commensurate with the size and nature of theCompany's business. A regular audit and review processes ensure that the controls arereinforced on an ongoing basis. Such controls have been assessed during the year takinginto consideration the essential components of internal financial controls. Based on theassessment carried out by the Company the internal financial controls were adequate andeffective and no reportable material weakness or significant deficiencies in the design oroperation of internal financial controls were observed during the year ended 31stMarch 2017.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review the Board of Directors of the Company ("Board")had appointed Mr. Deepak Malik a nominee of Black River Food 2 Pte. Ltd. as anAdditional Director with effect from 26th April 2016. Further theShareholders of the Company had at the Annual General Meeting held on 29thAugust 2016 appointed Mr. Deepak Malik as a Director liable to retire by rotation.
During the year under review the Board had also appointed Mr. Narendra Baheti as anAdditional Director of the Company with effect from 30th August 2016. In termsof provisions of Section 161 of the Companies Act 2013 Mr. Narendra Baheti shall holdoffice as such only upto the date of forthcoming Annual General Meeting ("AGM").
Pursuant to the provisions of Section 160 of the Companies Act 2013 the Company hasreceived a notice from a Member proposing candidature of Mr. Narendra Baheti for theoffice of Director at the forthcoming AGM.
Further the Board had subject to the approval of the Shareholders of the Company andsuch other consents and approvals that may be required designated Mr. Narendra Baheti asan Executive Director of the Company for a period of three years with effect from 30thAugust 2016 with payment of remuneration as determined by the Board and in accordancewith the policy of the Company.
In terms of provisions of the Companies Act 2013 Ms. Ashni Biyani retires from theBoard of the Company by rotation at the forthcoming AGM and being eligible has offeredherself for re-appointment.
Further the Board of Directors had subject to approval of the Shareholders of theCompany and such other consents and approvals that may be required re-appointed Ms. AshniBiyani as the Whole Time Director of the Company for a period of three years to come intoeffect from 15th November 2017 with payment of remuneration as determined bythe Board and in accordance with the policy of the Company.
The Notice convening forthcoming AGM includes the proposal for appointment /re-appointment of aforesaid Directors. A brief resume of the Directors seeking appointment/re-appointment at the forthcoming AGM and other details as required to be disclosed interms of Regulation 36(3) of the SEBI Listing Regulations and Secretarial Standard onGeneral Meetings (SS-2) forms part of the Notice calling the AGM. None of the Directorsare disqualified for appointment / re-appointment under Section 164 of the Companies Act2013. Ms. Ashni Biyani is related to Mr. Kishore Biyani being daughter of Mr. KishoreBiyani. Mr. Narendra Baheti is not related to any other Director of the Company.
The Company has received individual declarations from following Independent Director(s)of the Company stating that they meet the criteria of independence as provided undersubsection (6) of Section 149 of the Companies Act 2013 and Regulation 16(1)(b) of theSEBI Listing Regulations: a) Mr. G N Bajpai b) Ms. Vibha Rishi c) Mr. Adhiraj HarishDuring the year under review Mr. Devendra Chawla was appointed as the Chief ExecutiveOfficer of the Company with effect from 11th February 2017 and Mr. ArunAgarwal has ceased to be Manager of the Company with effect from 4th February2017.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met 6 (Six) times during the financial year 2016-17. The detailsof composition of the Board and its Committees their meetings held during the year underreview and the attendance of the Directors / Committee Members at the respective meetingsare provided in the Corporate Governance Report which forms part of this Annual Report.During the year under review the recommendations made by the Audit Committee wereaccepted by the Board. There were no instances where the Board has not accepted anyrecommendation of the Audit Committee.
PERFORMANCE EVALUATION OF BOARD
In compliance with the provisions of the Companies Act 2013 and SEBI ListingRegulations the Company has under taken the performance evaluation process for the Boardof Directors its Committees and that of individual Directors. The performance evaluationwas undertaken as per the Guidance Note on Board Evaluation issued by Securities andExchange Board of India setting out parameters for conducting performance evaluation ofthe Board. The performance evaluation process for functioning of Board and its Committeeswas based on discussions amongst the Board Members Committee Members and responses sharedby each Member. The parameters for evaluating performance of Board inter aliacomprised of key areas such as Board composition competency of Directors diversityfrequency of Board and Committee meetings information sharing and disclosures made to theBoard and its Committees. The Board found that there was considerable value and richnessin the discussions and deliberations. Individual Directors were evaluated in the contextof the role played by each Director as a member at the respective meetings in pursuit ofthe purpose and goals participation at the meetings independent views and judgementinitiative ownership of value building. The responses received on evaluation of the Boardand its Committees and that of the individual Directors were shared with the Chairman.Based on the outcome of the evaluation the Board and Committees have agreed for possiblecontinuous improvisation to ensure better effectiveness and functioning of the Board andCommittees.
A report on Corporate Governance together with Auditors' Certificate as required underRegulation 34 of SEBI Listing Regulations forms part of this Annual Report.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
The Management Discussion & Analysis Report as required under Regulation 34 of SEBIListing Regulations is presented separately and forms part of this Report.
BUSINESS RESPONSIBILITY REPORT
A report in terms of Regulation 34(2)(f) of the SEBI Listing Regulations on thebusiness responsibility initiatives taken by the Company is presented separately and formspart of this Annual Report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has established a vigil mechanism to provide a framework for promotingresponsible and secure whistle blowing and to provide a channel to the employee(s)Directors and other stakeholders to report to the management concerns about unethicalbehavior actual or suspected fraud or violation of the code of conduct or policy/ies ofthe Company as adopted / framed from time to time. The details of said vigil mechanism isgiven in Corporate Governance Report which forms part of this Annual Report.
NOMINATION AND REMUNERATION POLICY
In terms of requirements prescribed under Section 178(3) of the Companies Act 2013the Nomination and Remuneration Policy inter alia providing the terms forappointment and payment of remuneration to Directors and Key Managerial Personnel isannexed to this Report as Annexure II.
CORPORATE RESPONSIBILITY STATEMENT
TheCompanyhasconstitutedaCorporateSocialResponsibility Committee ("CSRCommittee") in accordance with Section 135 of the Companies Act 2013. The Boardof Directors of the Company have based on recommendations made by the CSR Committeeformulated and approved Corporate Social Responsibility Policy for the Company.
The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 is made in prescribed form which is annexed to this Report as Annexure III.
RISK MANAGEMENT POLICY AND INTERNAL ADEQUACY
As a diversified enterprise your Company continues to focus on a system-based approachto business risk management. The Company has a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The Committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. TheAudit Committee has additional oversight in the area of financial risks and controls. YourCompany has a comprehensive risk assessment framework and well laid out policy to managethe risks along with internal control systems that are commensurate with the nature ofits business and the size and complexity of its operations which are regularly tested byStatutory as well as Internal Auditors. Any significant audit observation is discussed andfollow up actions thereon are reported to the Committees.
AUDITORS AND AUDITORS' REPORT
In terms of provisions of Section 139 of the Companies Act 2013 and Rules madethereunder it is mandatory to rotate the Statutory Auditors on completion of the maximumterm permitted therein. M/s. Deloitte Haskins & Sells Chartered Accountants theStatutory Auditors of the Company hold office till the conclusion of the forthcoming AGMof the Company. M/s. Deloitte Haskins & Sells Chartered Accountants having completedthe maximum term of ten years as Statutory Auditors shall not be entitled forre-appointment as Statutory Auditors of the Company. The Board has recommended theappointment of M/s. S R B C & Co. LLP Chartered Accountants as the StatutoryAuditors of the Company in place of M/s. Deloitte Haskins & Sells CharteredAccountants for a period of five years from the conclusion of the forthcoming AGM of theCompany till the conclusion of the twenty-sixth AGM for approval of shareholders of theCompany. M/s. S R B C & Co. LLP Chartered Accountants have granted their consent forappointment as Statutory Auditors and also confirmed their eligibility for being appointedas Statutory Auditors of the Company in terms of requirements prescribed under theCompanies Act 2013. The notes on financial statements referred to in the Auditors Reportare self-explanatory and do not call for any further comments and explanations. TheAuditors' Report does not contain any qualification reservation or adverse remark. Noinstances of fraud have been reported by the Statutory Auditors of the Company underSection 143(12) of the Companies Act 2013.
SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
The Company has appointed M/s. Sanjay Dholakia & Associates Company Secretaries toconduct Secretarial Audit of the Company for the financial year 2016 - 17 in terms of theprovisions of Section 204 of the Companies Act 2013. The Secretarial Audit Report isannexed to this Report as Annexure IV. The Secretarial Audit Report does notcontain any qualification reservation or adverse remark.
Your Company has not been accepting any deposits from the public and hence there are nounpaid / unclaimed deposits nor is there any default in repayment thereof.
EXTRACT OF ANNUAL RETURN
In terms of provisions of Section 92(3) of the Companies Act 2013 an extract ofAnnual Return in prescribed format is annexed to this Report as Annexure V.
PARTICULARS OF EMPLOYEES
Disclosure with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided under AnnexureVI which is annexed to this Report. In terms of the provisions of first proviso toSection 136 (1) of the Companies Act 2013 information pursuant to Section 197 of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is excluded from the Annual Reportbeing sent to the Members of the Company and is available for inspection by the Members atregistered office of the Company during business hours on working days up to the date ofthe forthcoming Annual General Meeting. If any Member is interested in obtaining a copythereof such Member may write to the Company Secretary and the same shall be provided.
The full Annual Report including aforesaid information is being sent electronically toall those Members who have registered their email addresses and is also available on thewebsite of the Company.
PARTICULARS OF EMPLOYEE STOCK OPTION PLAN
Pursuant to the approval of the shareholders the Company has formulated followingemployee stock option schemes: a. FVIL Employees Stock Option Plan-2011 ("FVILESOP-2011") b. Future Consumer Enterprise Limited - Employee Stock Option Plan2014 ("FCEL ESOP - 2014")
The aforesaid Employee Stock Option Plans are in compliance with SEBI (Share BasedEmployee Benefits) Regulations 2014 as amended from time to time ("SEBI EmployeeBenefits Regulations") and there have been no material changes to these Plansduring the financial year under review. The details of options granted and exercised underFVIL ESOP-2011 and FCEL ESOP-2014 and other disclosures as required under SEBI EmployeeBenefits Regulations are available on the website of the Company -http://futureconsumer.in/statutory-documents.html and are also provided in Annexure VIIwhich is annexed to this Report.
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION EXPENDITURE ON RESEARCH ANDDEVELOPMENT FOREIGN EXCHANGE EARNINGS AND OUTGO ETC.
The Company in its regular course of business is vigilant to conserve the resources andcontinuously implements measures required to save energy.
The business activities of the Company are not specific to any technology requirements.In the course of operations processes are formed and implemented to achieve operationalefficiencies in the Company and also at its subsidiaries which assist in maintainingproduct quality and cost control.
In respect of the manufacturing units of the Company and its subsidiaries the briefparticulars in respect of various steps and initiatives taken regarding conservation ofenergy and technology absorption are as under:
A) Conservation of Energy
The energy utilization in each manufacturing unit is being monitored regularly in orderto achieve effective conservation of energy. The significant energy conservation measuresduring the year under review were as under:
(i) the steps taken or impact on conservation of energy; a. Use of Energy EfficientLighting systems like LED in place of HPMV or HPSV lamps/tube lights; b. All new machineswith interlocks to avoid idle running of the same; c. Turbo ventilator in buildings toavoid heat and reduce load on AHU/Exhaust fans; d. Installation of timer switches for yardlight control; e. Using high energy efficient IE3 rated Motors in all new plantscommissioned; f. Used VFD in process machines in F&V unit; g. Steam condensationrecovery project to reduce on electricity consumption in boiler; h. Use of transparentroof sheets wherever possible to make use of natural lighting; i. Rationalizing Cold chainat Nilgiri's Bakery unit to reduce cold room energy consumption; j. Removed 33 kg LPGcylinders and replaced with 450 kg Quantas in one manufacturing unit resulting in 1 ton ofLPG saving per annum; k. Switching off machines / equipment when not in use and switchingoff lights in areas not having adequate activity by regrouping/repositioning the activityso that there will not be any wastage of energy; l. Centralised controls for coolers andshop lighting; m. Use of power capacitors to improve the power factor;
(ii) The steps taken for utilizing alternate sources of energy; a. India Food Parksituated at Tumkur facilitated through external investment on BOOT model enables IndiaFood Park reduce its carbon footprints by equivalent of 1500 carbon emission reductioncertificate. 1 MW Solar Electricity generation plant is commissioned at India Food ParkTumkur. b. 2 MW Solar Electricity generation plant is under commissioning stage at IndiaFood Park Tumkur. With its completion India Food Park is likely to use 80 % ofElectricity from Solar Power. c. Majority of our Boilers are Briquette fired boilers.
(iii) The capital investment on energy conservation equipment; Few new initiativestaken by the Company are within design phase of new units. The investment in alreadycompleted activities is approx. Rs. 20 lakhs.
B) Technology absorption
In the manufacturing process Form Fill Seal Machines are installed for packagingwhich provides greater speed and versatility and are cost effective. The aforesaidinitiatives have resulted in economies in costs.
The details in respect of Foreign Exchange earnings/ outgo for the year under reviewis provided below:
Foreign Exchange Earnings: Nil
Foreign Exchange Outgo:
|Particulars ||(Rs. in Lakhs) |
|Travelling Expenses ||10.01 |
|Brand Royalty ||65.89 |
|Marketing ||12.21 |
|Professional Fees ||76.14 |
|Sitting Fees ||1.00 |
|Total ||165.25 |
1) The Company has not issued any equity shares with differential rights as todividend voting or otherwise.
2) The Whole Time Director has not received any commission from the Company nor anyremuneration or commission from any of its holding or subsidiary company.
3) There are no significant / material orders passed by the regulators/courts/tribunalsduring the year under review which would otherwise impact the going concern status of yourCompany and its future operations.
4) During the year under review there were no reported instances of cases filedpursuant to Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed that: a) in the preparationof the annual accounts for the financial year ended 31st March 2017 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any; b) the Directors have selected such accounting policiesand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at 31stMarch 2017 and of the profit or loss of the Company for that period; c) the Directorshave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities; d) theDirectors have prepared the annual accounts for the financial year ended 31stMarch 2017 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 were operating effectively; f) the Directors have devised proper systems toensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
Your Directors would like to thank and place on record their appreciation for thesupport and co-operation provided to your Company by its Shareholders Future Groupentities and in particular regulatory authorities and its bankers. Your Directors wouldalso like to place on record their appreciation for the efforts put in by employees of theCompany during the year.
On behalf of the Board of Directors
G. N. Bajpai
Date: 26th May 2017
Details as required under Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014
(i) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Director Company Secretary and Manager during the financial year 2016-17ratio of the remuneration of each Director to the median remuneration of the employees ofthe Company for the financial year 2016-17
|Sr. No. ||Name of Director/KMP and designation ||Remuneration of Director / KMP for Financial Year 2016-17 ||% increase in Remuneration for Financial Year 2016-17 ||Ratio of remuneration of each Director to median remuneration of employees |
| || ||(Rs. in Lakhs) || || |
|1. ||Ashni Biyani ||85.02 ||23% ||38.07 |
| ||Whole Time Director || || || |
|2 ||Arun Agarwal ||39.83 ||16% ||17.83 |
| ||Manager || || || |
| ||(ceased to be Manager w.e.f. 4th February 2017) || || || |
|3 ||Devendra Chawla ||30.20 ||Not Applicable ||13.52 |
| ||Chief Executive Officer || || || |
| ||(appointed w.e.f. 11th February 2017) || || || |
|4 ||Manoj Gagvani ||134.14 ||76% ||60.06 |
| ||Company Secretary and Head-Legal || || || |
|5 ||Manoj Saraf ||132.08 ||35% ||59.15 |
| ||Chief Financial Officer || || || |
|6 ||Narendra Baheti ||144.13 ||Not Applicable ||64.54 |
| ||Executive Director || || || |
| ||(appointed w.e.f. 30th August 2016) || || || |
(ii) Percentage increase in the median remuneration of employees in the financial year
In the financial year 2016-17 there was an increase of 18% in the medianremuneration of employees.
(iii) Number of permanent employees on the rolls of Company
There were 1422 permanent employees on the rolls of Company as on 31stMarch 2017.
(iv) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration
The average percentage increase made in the salaries of employees other than themanagerial personnel for the financial year i.e. 2016-17 was 13% whereas the increase inthe managerial remuneration for the same financial year was 21%.
(v) Key parameters for any variable component of remuneration availed by the directors
No variable component forms part of remuneration paid to Whole Time Director. Inrespect of the Executive Director the variable component of remuneration is in line withpolicy of the Company which largely takes into consideration the performance of theCompany as well as the individual concerned.
(vi) Affirmation that the remuneration is as per the remuneration policy of the Company
It is hereby affirmed that the remuneration paid is as per the Remuneration Policy ofthe Company.
Annexure VII Disclosures relating to Employee Stock Option Scheme(s) in respect ofOptions granted till 31st March 2017
|Sr. No ||Particulars ||FVIL ESOP-2011 ||FCEL ESOP-2014 |
|A ||Disclosures in terms of the Guidance note on accounting for employee share based payments issued by ICAI or any other relevant accounting standards as prescribed from time to time ||Refer Note No. 36 in Notes to Standalone Financial Statements |
|B ||Diluted Earnings Per Share (EPS) on issue of shares pursuant to all the schemes covered under the regulations shall be disclosed in accordance with Accounting Standard 20 Earnings Per Share issued by ICAI or any other relevant accounting standards as prescribed from time to time ||0.04 |
|C ||Details related to ESOS || |
(i) A description of each ESOS that existed at any time during the year including thegeneral terms and conditions of each ESOS
|(a) ||Date of Shareholders' Approval ||10th August 2010 and 16th January 2012 ||12th January 2015 and 12th May 2015 |
|(b) ||Total Number of Options approved under ESOS ||50000000 ||Primary Route : 31950000; |
| || || ||Secondary Route : 79800000 |
|(c) ||Vesting Requirements ||At the end of one year 30% of options from the date of Grant granted At the end of two years 30% of options from the date of Grant granted At the end of three years 40% of options from the date of Grant granted ||At the end of one year 20% of options from the date of Grant granted At the end of two years 30% of options from the date of Grant granted At the end of three years 50% of options from the date of Grant granted |
|(d) ||Exercise price or Pricing formula ||` 6 ||Primary Route : The exercise price per Option shall not be less than the face value of Equity Shares and shall not exceed market price of the Equity Share of the Company as on date of grant of Options as may be decided by Nomination and Remuneration / Compensation Committee. |
| || || ||Secondary Route : The exercise price per Option shall not exceed market price of the Equity Share of the Company as on date of grant of Options or the cost of acquisition of such shares to the Company applying FIFO basis whichever is higher as may be decided by Nomination and Remuneration / Compensation Committee. |
|(e) ||Maximum term of Options granted ||Three Years from the date of Vesting ||Three Years from the date of Vesting |
|(f) ||Source of Shares (primary secondary or combination) ||Primary ||Primary and Secondary |
|(g) ||Variation of terms of Options ||Nil ||Nil |
|(ii) ||Method used to account for ESOS - Intrinsic or fair value ||Fair Value ||Fair Value |
|(iii) Where the company opts for expensing of the options using the intrinsic value of the options the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed. ||Not Applicable |
(iv) Option Movement during the year (for each ESOS)
| || ||FVIL ESOP-2011 ||FCEL ESOP-2014 ||FCEL ESOP-2014 |
| || ||(Primary Route) ||(Secondary Market ||(Primary Route) |
| || || ||Route) || |
|a) ||Number of Options outstanding at the beginning of the Period ||15700000 ||15950000 ||Nil |
|b) ||Number of Options granted during the year ||Nil ||Nil ||10000000 |
|c) ||Number of Options forfeited / lapsed during the year ||Nil ||1036000 ||500000 |
|d) ||Number of Options vested during the year. ||4500000 ||3190000 ||Nil |
|e) ||Number of Options exercised during the year ||5050000 ||2626000 ||Nil |
|f) ||Number of shares arising as a result of exercise of Options ||5050000 ||2626000 ||Not Applicable |
|g) ||Money realized by exercise of Options ||30300000 ||34558160 ||Not Applicable |
|h) ||Loan repaid by the Trust during the year from exercise price received ||Not Applicable ||` 344.92 Lakhs ||Not Applicable |
|i) ||Number of options outstanding at the end of the year ||10650000 ||12288000 ||9500000 |
|j) ||Number of Options exercisable at the end of the year. ||150000 ||564000 ||Nil |
|Sr. No ||Particulars ||FVIL ESOP-2011 ||FCEL ESOP-2014 |
|v) ||Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock. ||Refer Note No. 36 in Notes to Standalone Financial Statements |
|vi) ||Employee wise details of options granted to: || |
|(a) ||Senior Managerial Personnel (Directors and Key Managerial Personnel) ||Refer Note 1 |
|(b) ||Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year. ||Nil |
|(c) ||Identified 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 from the time of grant. ||Nil |
vii) A description of the method and significant assumptions used during the year toestimate the fair value of options including the following information:
|(a) ||the weighted-average values of share price exercise price expected volatility expected option life expected dividends the risk-free interest rate and any other inputs to the model; ||Refer Note No. 36 in Notes to Standalone Financial Statements |
|(b) ||the method used and the assumptions made to incorporate the effects of expected early exercise; ||The fair value of each Option is estimated using the Black Scholes Option Pricing model. |
|(c) ||how expected volatility was determined including an explanation of the extent to which expected volatility was based on historical volatility; and ||The volatility used in the Black Scholes Option Pricing model is the annualized standard deviation of the continuously compounded rates of return on the stock over a period of time. The period considered for the working is commensurate with the expected life of the Options and is based on the daily volatility of the Company's stock price on NSE. The Company has incorporated the early exercise of Options by calculating expected life on past exercise behaviour. |
|(d) ||whether and how any other features of the option grant were incorporated into the measurement of fair value such as a market condition. ||There are no market conditions attached to the grant and vest. |
Details related to Trust:
The details inter alia in connection with transactions made by the Trust meantfor the purpose of administering the Future Consumer Enterprise Limited Employee StockOption Plan -2014 are as under:
(i) General information on all schemes
|Sr. No. ||Particulars ||Details |
|1 ||Name of the Trust ||Future Consumer Enterprise Employees Welfare Trust |
|2 ||Details of the Trustee(s) ||Vistra ITCL (India) Limited (formerly known as IL & FS Trust Company Limited) |
|3 ||Amount of loan disbursed by Company / any company in the group during the year ||` 1295.27 Lakhs |
|4 ||Amount of loan outstanding (repayable to Company / any company in the group) as at the end of the year ||` 2982.55 Lakhs |
|5 ||Amount of loan if any taken from any other source for which Company / any company in the group has provided any security or guarantee. ||Nil |
|6 ||Any other contribution made to the Trust during the year ||Nil |
|(ii) Brief details of transactions in shares by the Trust || |
|(a) ||Number of shares held at the beginning of the year; ||11532988 |
|(b) ||Number of shares acquired during the year through: || |
| ||(i) primary issuance ||Nil |
| ||(ii) secondary acquisition also as a percentage of paid up equity capital as at the end of the previous financial year along with information on weighted average cost of acquisition per share ||6309646 equity shares constituting 0.38% of the paid up equity share capital of the Company as on 31st March 2016. Weighted average cost of acquisition per share ` 20.53 per share |
|(c) ||Number of shares transferred to the employees / sold along with the purpose thereof ||2621000 equity shares pursuant to exercise of options granted to the employees |
|(d) ||Number of shares held at the end of the year ||15221634 equity shares |
(iii) In case of secondary acquisition of shares by the Trust
|Sr. No ||Particulars ||Number of shares ||As a percentage of paid-up equity capital as at the end of the year immediately preceding the year in which shareholders' approval was obtained |
|a) ||Held at the beginning of the year ||11532988 ||0.70% |
|b) ||Acquired during the year ||6309646 ||0.38 % |
|c) ||Sold during the year ||Nil ||NA |
|d) ||Transferred to the employees during the year ||2621000 ||0.16 % |
|e) ||Held at the end of the year ||15221634 ||0.92 % |
Note 1: Details of Options granted during the year:
|Sr. No. ||Name of the Employee ||Designation ||No. of Options granted FCEL ESOP-2014 (Primary Route) |
|A ||Key Managerial Personnel / Senior Management Personnel || || |
|1 ||Narendra Baheti* ||Executive Director ||5000000 |
|2 ||Rahul Kansal ||Head - Strategy and Marketing ||1000000 |
|3 ||Saurabhkumar Lal ||CEO - Manufacturing & Supply Chain ||1000000 |
|4 ||Amit Kumar Agarwal ||Chief - Commercial ||315000 |
|5 ||Jacob Peter ||Chief - People Office ||**500000 |
*Appointed as an Executive Director w.e.f 30th August 2016
**Options cancelled w.e.f. 17th March 2017