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Indage Restaurants & Leisure Ltd.

BSE: 532264 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE525H01013
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Indage Restaurants & Leisure Ltd. (INDAGEREST) - Director Report

Company director report

INDAGE RESTAURANTS AND LEISURE LIMITED ANNUAL REPORT 2010-2011 DIRECTOR'S REPORT To, The Shareholders, Your Directors present the 28th Annual Report together with the Audited Statement of Accounts (Standalone) for the year ended 31st March, 2011. FINANCIAL RESULTS: (Rs. in Lacs) Standalone 2010-11 2009-10 Profit/(Loss) before Depreciation, Taxation & Extraordinary items (864.05) (728.91) Depreciation 462.24 466.06 Profit/(Loss) before Tax & Extraordinary items (1326.29) (1194.97) Tax Expenses Current 0 0 Fringe benefit Tax 0 0 Deferred 0 0 Extra-ordinary Items 742.18 276.16 Profit/(Loss) after Tax (2068.47) (1471.13) Minority interest 0 0 Profit/(Loss) after Tax after Minority Interest (2068.47) (1471.13) Balance brought forward from the previous year (2044.14) (573.01) Balance carried to Balance sheet (4112.61) (2044.14) FINANCIAL PERFORMANCE: During the year under review, the Company incurred a Loss before depreciation, tax & extra-ordinary items of Rs. 864.05 lacs as compared to Loss of Rs. 728.91 lacs in the previous year. However, the bottom line reflected overall Loss of Rs. 2068.47 lacs as compared to Loss of Rs. 1471.13 lacs in the previous year mainly because of increase in total expenditure including depreciation cost. REVIEW OF OPERATIONS: The standalone turnover for the year ended 31st March, 2011 stood at Rs. 2060.39 lacs as against turnover of Rs. 2521.46 lacs in the previous year. However, the bottom line reflected a loss of Rs. 2068.47 lacs as against loss of Rs. 1471.13 lacs in the previous year, which is mainly attributable to the decrease in income to Rs. 2060.39 lacs as against Rs. 2521.46 lacs in previous year (standalone) increase in expenditure to Rs. 2068.47 lacs as against Rs. 1471.13 lacs in previous year (standalone). In spite of losses in the Current Year, your Directors are hopeful of doing better in coming years, as the Company is in process of acquiring well known chain of restaurant. DIVIDEND: In view of losses incurred and to finance the growth plans through internal accruals, your Directors do not recommend any Dividend for the year 2010- 2011. SUBSIDIARY: 1. Nando's Indage Restaurants Private Limited: Your Company has written off Rs.7,42,17,758/- investment in Nando's Indage Restaurants Private Limited. During the year under review, the turnover of the Company stood at 361.80 lacs as against to 314.33 lacs in the previous year. The Company's financials have not been attached with this annual report and thus the annual report is termed as standalone report. 2. Amazon Foods and Beverages Pvt. Ltd. Your Company owns 99.90 percent of the share Capital of Amazon Foods and Beverages Pvt. Ltd. The Company's financials have not been attached with this annual report and thus the annual report is termed as standalone report. CORPORATE GOVERNANCE: The Company has partly complied with the mandatory provisions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement (as amended) with the Stock Exchange. A separate Annexure of Corporate Governance and Certificate from the Auditors of the Company certifying compliance of conditions of Corporate Governance are annexed herewith and form part of this Annual Report. DIRECTORS: Mr. Chaitanya Durve, Director, retires by rotation at the ensuing Annual General Meeting, and being eligible, offer himself for re-appointment. The brief details of the said Director has been provided in Corporate Governance Report under the heading 'Board of Directors'. DIRECTORS' RESPONSIBILITY STATEMENT As required under the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm: i) that in the preparation of the Annual Accounts for the year ended 31st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2011 and of the Loss of the Company for the year under review; iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) that the Annual Accounts for the year ended 31st March, 2011, have been prepared on a `going concern' basis. FIXED DEPOSIT: The Company has neither invited nor accepted any Fixed Deposits from the public during the year. AUDITORS: M/s. Sorab S. Engineer & Co. Chartered Accountants, (Registration No. 110417W), the Auditors of the Company hold their office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment as the Company's Auditors from the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. The Company has received their willingness to act as Auditors of the Company along with a letter from them to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. AUDITORS OBSERVATION: With reference to the observations made by the Auditors in their Report, the Directors hereby state as follows: 1. In respect of Capital Work in Progress, the Management clarifies that there are certain projects initiated by the Company which are kept on abeyance due to the financial crisis of the Company and are in the process to revive the same in near future. 2. In case of Unsecured Loans from Companies under the same Group and from Directors, the Management states that the said amounts are payable to respective parties and the management is in the process of reconciling the same. 3. In respect of Sundry debtors, some of the debtors are more than six months over and for which reconciliation / reconfirmation is awaited . The Management clarifies that the said transaction shall be confirmed and report of the said confirmation shall be given to the auditors. 4. Some of the other observations have been clarified by the Management separately. COMPLIANCE CERTIFICATE: As required under Section 383(A)(1) of the Companies Act, 1956, Compliance Certificates is obtained from Secretary in Whole-time practice. PARTICULARS OF EMPLOYEES: During the year under review, the Company has not employed any employee whose particulars are required to be disclosed in this report pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2000. ADDITIONAL INFORMATION: As required by the Companies (Disclosure of particulars in the report of the Board of Directors) rules, 1988, the relevant information and details are mentioned below: (A) CONSERVATION OF ENERGY: The Company has taken all the necessary measures to conserve the energy in terms of Electricity though the Company's operations involve low energy consumption. (B) TECHNOLOGY ABSORPTION: The Company is not involved in carrying on any business which would require technology absorption. (C) FOREIGN EXCHANGE EARNINGS & OUTGO: The Company has earned Foreign Exchange of Rs.97,40,132/- during the year under review (previous year - Rs.1,00,79,517/-). There has been no Foreign Exchange outgo on account of imports. ACKNOWLEDGEMENT: Your Directors take this opportunity to express their gratitude for the assistance and co-operation received from employees and the support they have extended in such tough times. We would also thank all our investors, clients, bankers and other business associates who have kept faith in recovery of Company. We also thank all government agencies for their support during the year and look forward for their contributed support in future. For and on Behalf of the Board of Directors Sham Chougule Vikrant Chougule Chairman Managing Director Place : Mumbai Date : 11th April, 2012 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW The Restaurant Industry in India is an important industry to the Indian Economy. It is one of the highest foreign exchange earners to the country as well as one of the largest employers both directly and indirectly. The Restaurant Industry in India is a very profitable business. It is directly linked to tourism industry and growth in the tourism industry leads to growth of Restaurant Industry. The government initiatives and varied business opportunities have acted as boon to Restaurant Business in India. Some initiatives undertaken by the government are 'Athithi Devo Bhava' & 'Incredible India'. The diverse culinary habits, wide range of Cuisines and diverse cooking techniques are some of the main factors which contribute to this industry. INDUSTRY STRUCTURE & DEVELOPMENTS: The Restaurant Industry had been going at a steady rate till it hit a roadblock due to Global Recession. The Global Economy is recovering at a slow pace and has yet not reached the pre recession position. In addition to this, the India has been battling its own set of problems such as political instability, high inflation and uncertainty in economic policies. All of these issues are collectively having an impact on the Indian Economy thus resulted in slowing down the growth rate. Two primary factors continue to hamper growth in the food service Industry- consumer confidence and the rising food prices. According to a report from the Asian Development Bank (ADB) worldwide food prices have risen by an average of 31.2 per cent in the first two months of 2011 compared to year- ago levels. As such, the report looks at the effects of a 30 per cent average increase in the global prices of food in 2011 from the 2010 level. The report also assumes the food price shock is temporary and hence assumes 5 per cent decline in global food prices in 2012. The biggest factor pushing prices is the cost of producing and marketing crops. The combination of rising prices and fall in number of customers has contributed to slack in the restaurant business and subsequent fall in margins. However, the Industry has definitely seen some improvement in terms of growth in the past one year and with the proper backing from the Government by way of policies and better infrastructure facilities, the Industry should be back to its earlier rate of growth soon. You may recall that the deadliest terrorists attacks on Mumbai in year November, 2008 have severally affected the restaurant business very badly and which has resulted into a loss of best of the profitable opportunities. The number of people visiting the Restaurants has reduced, due to which the profits of the Company have reduced considerably. This has impacted on the Company operations which ultimately have disturbed the business and resulted into huge losses. The Company too had suffered due to the said recession and terrorists attacks. The Management wishes to inform that there is a Ray of Hope and will always strive for the betterment of the Company. The Industry Structure has started to undergo changes and the management is undertaking various measures for the recovery of the Company. OUTLOOK: The National Restaurant Association's - Restaurant Performance Index is positive and hence the optimistic outlook is predicted. Your Company is expecting their sales to be higher in coming months. Most of the Restaurant operators expect the economic conditions to improve in next six months but at present the market conditions is quite stable. INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT: Even Hotel and Restaurant Industry is entirely dependent upon the services it offers to the public. Every Company in this business needs to identify and access the risks and manage them effectively. The Company has to verify that the food and beverages served to the guests are of proper quality and non contaminated. There is also the need to maintain the ambience of the restaurant and that the security of the guests is also one of the important factor which affects the Restaurant Business, specially after such heinous incidents of 26/11/2008. Internal control systems are an integral part of the organization. They play a vital role in identifying and controlling any business risks. The Company is taking all steps necessary for maintaining a strong internal control system and ensures adequate disclosures are made to achieve the same. FINANCIAL AND OPERATING PERFORMANCE The market conditions and various factors have affected the Company Operations and have hugely suffered the performance of the Company. The Company is yet to make significant recovery from its downfall in 2008. However as the entire industry is dealing with similar problems, it is expected that progress shall be made once the problems faced by the industry are resolved. OPPORTUNITIES, THREATS, RISKS AND CONCERNS The Restaurant Industry in India has undergone significant changes. The standard of living of people in India has also increased. The eating habits and preferences of people in India have seen a shift from the typical Indian food to continental and various other cuisines. The Industry is experiencing a new era because of change in the attitude of the consumers who wishes to try a new variety of dishes and foods items. Thus, the Restaurant Industry now has opportunity for expansion and diversification. Nowadays, the young generation is opting for Hotel Management courses as the potential in such Industry is increasing extensively. The career opportunities is also increasing thereby a pool of talent is generated with wide and variety of profitable ideas. There are various risk factors that could adversely affect the business. These include increasing competition, rising food prices and general inflation, possible power and water shortage, supply and liquidity constraints. Lack of certainty in Government policies and future economic scenario adds to the woes of the Industry. As the restaurant industry is the most affected from the rising food costs, there is need for assurance from the Government of some positive steps in this direction. However, the country's largely young population is likely to substantially contribute to the growth of the business with their increasing disposable income. Also the business is expected to pick up once the economic situation improves. ON A CONCLUDING NOTE: The Company is looking to resolve all its internal problems at the earliest including the removal of suspension of its trading at the exchange and is confident of doing so with your support. The Company is looking forward to a brighter future and hopes to regain all its past glory and once again be on the path of speedy growth. DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE CODE OF CONDUCT This is to confirm that the Company has adopted a Code of Conduct for all Board Members and Senior Management of the Company. I confirm that the Company has in respect of the financial year ended 31st March, 2011 received from the senior Management Team of the company and the Members of the Board a declaration of Compliance with the code of conduct as applicable to them. For the purpose of the declaration, Senior Management Team means the Board member, Senior Management and all employees in and above officer's level as on 31st March, 2011. sd/- Sham G. Chougule Chairman Place : Mumbai Date : 11th April, 2012