Your Directors have pleasure in presenting the Twenty Second (22nd) Annual Reporttogether with the Audited Financial Statements of the Company for the Financial Year endedMarch 31 2017 ("FY 2017").
Pursuant to the notification dated February 16 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") with effect from April 1 2016 (transition date being April 1 2015).Accordingly financial statements for the year ended March 31 2016 and March 31 2017have been prepared in accordance with the recognition and measurement principles laid downin the Ind AS 34 "Interim Financial Reporting" prescribed under Section
133 of the Companies Act 2013 read with the relevant rules issued thereunder and theother accounting standards generally accepted in India.
| || || || ||( Rs. in Lakhs) |
|Particulars ||Standalone ||Consolidated |
| ||FY 2017 ||FY 2016 ||FY 2017 ||FY 2016 |
|Sales & Other Income ||256055.47 ||242153.78 ||259813.14 ||244954.70 |
|Profit before Interest Depreciation & Tax but after exceptional items ||24890.39 ||28310.02 ||24370.37 ||27526.02 |
|Less: Interest ||0 ||0 ||0 ||0 |
|Less: Depreciation ||15115.25 ||12426.89 ||15543.22 ||12824.46 |
|Profit / (Loss) before Tax ||9775.14 ||15883.13 ||8827.15 ||14701.56 |
|Less: Provision for Taxation ||3049.69 ||5220.79 ||3049.69 ||5012.56 |
|Profit / (Loss) after Tax ||6725.45 ||10662.34 ||5777.46 ||9689.00 |
Results of Operations and the State of Company's Affairs
The highlights of the Company's performance for FY 2017 are as under:
a) Revenue from operations increased by 5.6% to Rs. 254607 lakhs
b) EBITDA decreased by 9.3% to Rs. 24659 lakhs
c) Profit before Tax decreased by 38.5% to Rs. 9775 lakhs
d) Net Profit decreased by 36.9% to Rs. 6725 lakhs
During the year there are no transfer to the General Reserves. No material changes andcommitments have occurred after the close of the financial year till the date of thisReport which affect the financial position
FY 2017 was a year of designing and implementing strategy for driving the Company'sevolution to the next phase of profitablegrowth. During FY 2017 the Company continued tofocus on optimum network expansion and driving technology platform to enhance the customerexperience and improving operational efficiency. The Company invested and implementedinitiatives to deliver long-term growth for its business while closely managing theshort-term events which influence performance.
While the economic growth momentum was temporarily impacted with demonetization duringthe year the Company sustained its focus on the cost rationalisation and improvingefficiencies.
Domino's Pizza and Dunkin' Donuts Restaurant network expansion was focused on alignmentwith the Return on Investment norms of the Company and the external operating environment.The Company increased its reach amongst relevant consumers by entry of Domino's Pizza inthe State of Nagaland. During FY 2017 Domino's Pizza India entered
29 new cities which takes the spread to a total of 1117 Restaurants in 264 cities. Thetotal number of Dunkin' Donuts Restaurant stands at 63 in 16 cities as on March 31 2017.With the focus on improving profitability few restaurants that failed to deliver theCompany's expected
ROI parameters were decommissioned during the year.
With the launch of Burger Pizza the Company aimed to grow its share in the allday individual consumption' occasion and further grow it's share in the chained IndianFood Service
Industry. Burger Pizza and Pizza Mania Extremes were among the two most innovativeproducts launched targeted to delight consumers met with good response and achieved theinternal launch objectives.
Dunkin' Donuts India ("DDI") on the other hand continued its efforts tostrengthen it's position in the sweet spot between the QSR and the Caf markets.
Continuous and renewed efforts were made to improve beverage and donut sales andbringing value offerings to food range. A number of product launches were made to caterrapidly evolving consumer taste and preferences such as Big Joy Burger Munchkins EgglessDonuts Cakes and DunkyDoos
a new range of donuts for the young guests. The range of
Big Joy Burger was extremely popular with the consumers.
During the year there was no change in the nature of the business of the Company.
Based on the Company's performance your Directors are pleased to recommend dividend ofRs. 2.50/- (i.e. 25%) per equity share of Rs. 10/- each fully paid up for FY 2017amounting to Rs. 1648.73 lakhs (excluding Dividend Distribution Tax of Rs. 335.64 lakhs)subject to approval of members at the ensuing Annual General Meeting ("AGM") ofthe Company.
The movement of the share capital during the year is as follows:
|Particulars ||Equity Share Capital (in Rs. ) |
|At the beginning of the year i.e. as on April 1 2016 ||657951060 |
|Stock Options allotted during the year : || |
|- Domino's Employees Stock Option Plan ||876640 |
|2007 (87664 equity shares of Rs. 10 each) || |
|- JFL Employees Stock Option Scheme ||663000 |
|2011 (66300 equity shares of Rs. 10 each) || |
|At the end of the year i.e. as on ||659490700 |
|March 31 2017 || |
Employees Stock Option Schemes
In order to motivate incentivize and reward employees the Company instituted variousEmployees Stock Option Schemes from time to time. The Company has three (3)
Employees Stock Option Schemes namely:
Domino's Employees Stock Option Plan 2007 ("ESOP 2007")
JFL Employees Stock Option Scheme 2011 ("ESOP 2011")
JFL Employees Stock Option Scheme 2016 ("ESOP 2016")
The Company implemented ESOP 2016 which was approved by the members through PostalBallot dated November 02 2016. The total number of options granted under ESOP 2016 shallnot exceed 350000 (Three Lakh Fifty Thousand). Each option when exercised shall beconverted into 1 (one) fully paid up equity share of the Company.
During FY 2017 10272 options were granted under ESOP 2011 and 14528 options weregranted under ESOP 2016. The applicable disclosure under SEBI (Share Based EmployeeBenefits) Regulations 2014 (the "ESOP Regulations") as at March 31 2017 isuploaded on the website of the Company (Web link:http://www.jubilantfoodworks.com/investors/ financial-information-2/) Further ESOP 2007ESOP 2011 & ESOP 2016 (collectively referred as "ESOP Schemes") of theCompany are in compliance with the ESOP Regulations.
Certificates from S. R. Batliboi & Co. LLP Chartered
Accountants Statutory Auditors with respect to the implementation of ESOP Schemeswould be placed before the members at the ensuing AGM and a copy of the same shall beavailable for inspection at the Registered Office & Corporate Office of the Company.
Operations of Subsidiary
Jubilant FoodWorks Lanka (Private) Limited ("JFLPL")
During the year the subsidiary Company launched 3 (three) new Domino's PizzaRestaurant taking its total Restaurant count to 23 (Twenty Three) as on March 31 2017(20
Restaurant count as on March 31 2016). Through steady expansion of the restaurantnetwork new restaurants were launched in Kalutara Kotahena and Boralesgamuwa marking
Domino's Pizza foray in these cities.
In addition to providingconsumerswithdifferentiated and innovative choices the menuwas revamped during the year and now it is catering completely to the Sri Lankan taste.Through ongoing aggressive marketing communication and promotion strategy together withenhancement of operational service level JFLPL aimed to reach out to more consumers andgenerate brand loyalty. A report on the performance and the financial position of JFLPLas per Companies Act 2013 and rules made thereunder (the "Act") is provided inForm AOC 1 attached to the Consolidated Financial Statements forming integral part of theAnnual Report.
Pursuant to the provisions of Section 136 of the Act separate audited accounts ofJFLPL are available on the website of the Company at www.jubilantfoodworks.com.
During FY 2017 there were no companies which became/ ceased to exist as SubsidiaryJoint Venture or Associate of the Company.
Extracts of Annual Return
The extracts of Annual Return as required under the Act in Form MGT - 9 is annexedherewith as Annexure "A" forming integral part of this Report.
Directors and Key Managerial Personnel
In terms of Articles of Association of the Company and provisions of the Act Mr. ShyamS. Bhartia Director of the Company is liable to retire by rotation at the ensuing AGMand being eligible offer himself for re-appointment. The Board of Directors recommend hisre-appointment for the consideration of the members of the Company at the ensuing AGM.During the year Mr. Sachin Sharma was appointed as President & Chief FinancialOfficer and Key Managerial Personnel of the Company with effect from September 3 2016.
Mr. Ajay Kaul CEO cum Wholetime Director and Key
Managerial Personnel of the Company resigned from the services of the Company witheffect from close of the business hours of March 31 2017. The Board placed on recordtheir deep sense of appreciation for the significant contribution made by him during histenure towards the stupendous growth of the Company.
Based on the recommendations of the Nomination
Remuneration and Compensation Committee ("NRC")
Board's approval and subject to members approval in ensuing AGM:-
1) Mr. Pratik Pota was appointed as CEO and Wholetime Director of the Company witheffect from April 1 2017;
2) Mr. Berjis Desai was appointed as an Additional Director (Independent) of theCompany with effectfrom May 29 2017; and
3) Mr. Shamit Bhartia and Ms. Aashti Bhartia were appointed as Additional Directors(Non-Executive) of the Company with effect from May 29 2017.
The Company has received notices under Section 160 of the Act together with requisitedeposit from members proposing appointment of above mentioned Directors of the Company.
The Company has received necessary declaration from each
Independent Director under Section 149(7) of the Act that he/ she meets the criteria ofindependence laid down in the Act and SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 ("Listing Regulations").
A brief profile and other details
Secretarial Standard-2 and Listing Regulations of Directors proposed to beappointed/re-appointed are annexed to the notice convening AGM.
Particulars of Employees Directors & Key Managerial Personnel
The details of Employees Directors and Key Managerial Personnel as required underSection 197 of the Act read with Companies (Appointment and Remuneration) Rules 2014 isannexed herewith as Annexure "B" forming integral part of this Report.
Loans Guarantees and Investments
Particulars of loans guarantees and investments made under the provisions of Section186 of the Act have been disclosed in Note 4 of the notes to the Standalone FinancialStatements forming integral part of the Annual Report.
Related Party Transactions
All contracts arrangements and transactions entered by the Company during FY 2017 werein the ordinary course of business and on arm's length basis. During the year the Companyhad not entered into any contract arrangement and transaction with related parties whichcould be considered material in accordance with the Company's Policy on materiality anddealing with related party transactions (the "policy") and accordingly thedisclosure of Related Party Transactions in Form AOC 2 is not applicable. The Policy asapproved by the Board is uploaded on the website of the Company (Web link:http://www.jubilantfoodworks.com/ investors/policies/).
Related Party disclosures have been disclosed in Note 32 of the notes to the StandaloneFinancial Statements forming integral part of Annual Report.
Auditors and Auditor's Report
As per Section 139 of the Act read with the Companies (Audit and Auditors) Rules 2014the term of S. R. Batliboi & Co. LLP (ICAI Regn. No. 301003E/E300005) CharteredAccountants as the Statutory Auditors of the Company expires at the conclusion of theensuing AGM of the Company. The Board place on record its appreciation for the ethicalstandards and quality maintained by S. R. Batliboi & Co. LLP as the Statutory
Auditors of the Company.
On the recommendation of the Audit Committee the Board recommended the appointment ofM/s Deloitte Haskins & Sells LLP Chartered Accountants (ICAI Regn. No. 117366W/W-100018) as the Statutory Auditors of the Company for an initial term of five (5) years.Accordingly a resolution proposing appointment of M/s Deloitte Haskins & Sells
LLP Chartered Accountants as the Statutory Auditors of the Company from theconclusion of 22nd AGM till the conclusion of 27th AGM of the Company forms part of theNotice of the 22nd AGM of the Company.
The Company has received the consent & eligibility certificate from M/s DeloitteHaskins & Sells LLP Chartered Accountants under Section 139(1) and 141 of the Act andthat the appointment if made shall be in accordance with the requiredundertheActapplicable provisions of the Act and rules framed thereunder. The Auditors' Report readtogether with Annexure referred to in the Auditors' Report does not contain anyqualification reservation adverse remark or disclaimers. During the year under reviewthe Statutory Auditors have not reported any matter under Section 143 (12) of the Acttherefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
The Board appointed M/s Chandrasekaran Associates
Practicing Company Secretaries to conduct Secretarial Audit for FY 2017. TheSecretarial Audit Report for the Financial
Year ended March 31 2017 is annexed herewith as Annexure "C" formingintegral part of this report. The said report is self-explanatory and does not contain anyqualification reservation adverse remark or disclaimers.
The detailed Risk Review is provided in the Management Discussion & Analysissection forming integral part of the Annual Report.
Internal Financial Control
The Company has in place adequate internal financial controls with reference toFinancial Statements. During the year such controls were tested and no reportablematerial weakness in the design or operations were observed.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year under review in terms ofRegulation 34 of the Listing Regulations is presented in a separate section formingintegral part of the Annual Report.
Dividend Distribution Policy
Pursuant to Regulation 43A of Listing Regulations the Board of Directors of theCompany approved the Dividend Distribution Policy of the Company ("the Policy")which provides the guidance for declaration of dividend and its pay-out by the Company.The Policy is uploaded on the website of the Company (Web link:http://www.jubilantfoodworks. com/investors/policies/) and is provided in the CorporateGovernance Report forming integral part of the Annual Report.
Business Responsibility Report
Regulation 34 of Listing Regulations mandates inclusion of the Business ResponsibilityReport ("BRR") as part of the Annual Report for top five hundred (500) listedentities based on market capitalization as on March 31 of every financial year. Incompliance with Listing Regulations BRR is annexed as
Annexure "D" forming integral part of this Report.
Corporate Social Responsibility
In terms of Section 135 of the Act read with the Companies (Corporate SocialResponsibility) Rules 2014 as amended ("CSR Rules") the Board of Directorshave approved a Corporate Social Responsibility Policy (CSR Policy) that strives towardswelfare and sustainable development of the different segments of the communityspecifically deprived and underprivileged segment.
Your Company believes in making lasting impact towards creating a just equitablehumane and sustainable society.
The Company endeavor's to continuously make focused efforts to evolve and ramp up theCSR activities in both social and environmental spheres improving the quality of life ofthe people in the society through its CSR endeavors.
The Annual Report on CSR is annexed as Annexure "E" forming integralpart of this Report.
The Corporate Governance philosophy of the Company is driven by the interest ofstakeholders and business needs of the organization. The Company continues to be compliantwith the requirements of Corporate Governance as enshrined in Listing Regulations. Interms of Regulation 27 of Listing Regulations the Corporate Governance Report along withcertificate received from M/s Chandrasekaran Associates
Practising Company Secretaries certifying compliance with the conditions of CorporateGovernance is annexed as
Annexure "F" forming integral part of this Report.
The Corporate Governance Report inter-alia contains the following disclosures:
b) Composition of Sustainability and Corporate Social Responsibility Committee
c) Whistle Blower Policy (Vigil Mechanism)
d) Appointment & Remuneration Policy
e) Performance Evaluation criteria of the Board its Committees & individualDirectors
Transfer to Investor Education and Protection Fund (IEPF)
Pursuant to applicable provisions of the Act read with IEPF Authority (AccountingAudit Transfer and Refund) Rules 2016 the Company has transferred unclaimed and unpaidshare application money received at the time of initial public of the Company in 2010 tothe IEPF established by the offer Central Government.
Pursuant to the provisions of The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal)
Act 2013 the Company has adopted a policy on prevention of sexual harassment atworkplace.
The Company is committed towards promoting the work environment that ensures everyemployee is treated with dignity and respect and afforded equitable treatment irrespectiveof their gender race social class caste creed religion place of origin sexualorientation disability or economic status. During the Calendar year the Company has notreceived any complaint.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
A) Conservation of Energy
The Company is committed to take the effective measures to conserve energy and driveenergy in its operations. Accordingly the Company undertook some cost-effectiveenergy-efficiency initiatives across all its Restaurants and Supply Chain Centres("SCC").
i) The steps taken or impact on conservation of energy
Installation of energy efficient all restaurants and SCC. Installation of EnergyManagement System in 434 (approx.) restaurants. Installation of Energy Saving Sensors inthe AC System of 394 (approx.) restaurants.
ii) The steps taken by the Company for utilizing alternate sources of energy in fewrestaurants
Conversion of Liquefied Petroleum Gas Fuel into Piped Natural Gas for Ovens installed.Introduction of cycles for delivery on trial basis. Introduction of Compressed Natural GasScooters on trial basis. Evaluation of lithium battery operated E-bikes on trial basis.
iii) The capital investment on energy conservation equipment
| ||( Rs. in Lakhs) |
|Particulars ||Amount |
|Installation of Energy Management System ||17.37 |
|Installation of AC Energy Saver System ||25.93 |
|Investment in power efficient LED Lights ||126.79 |
|in certain restaurants & SCC || |
B) Technology Absorption
All steps taken towards Energy Conservation are the result of technology absorptionhowever there is no specific information to be furnished in this regard.
C) Foreign Exchange Earnings & Outgo
Information pertaining to Foreign Exchange Earnings & Outgo is as under:-
( Rs. in Lakhs)
|Particulars ||FY 2017 ||FY 2016 |
|Foreign Exchange Earnings ||- ||- |
|Export of Goods (FOB value basis) ||- ||- |
|Total Inflow ||- ||- |
|CIF Value of Imports || || |
|(Accrual basis) || || |
|Raw Materials & Components ||151.74 ||198.21 |
|Store & Spares ||4.08 ||- |
|Capital Goods ||227.29 ||106.92 |
|Expenditure in Foreign || || |
|Currency (Accrual Basis) || || |
|Foreign Travel ||3.67 ||17.56 |
|Franchisee Fees ||7717.78 ||7299.14 |
|Store Opening Fees ||388.78 ||551.38 |
|Total Outflow ||8171.23 ||7868.08 |
Directors Responsibility Statement Your Directors state that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of the end of the financial year and of the profit of the Company for thatperiod;
c) they have had taken proper and the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
Based on the framework of internal financial controls including the financial reportingand compliance systems established and maintained by the Company work performed by theinternal statutory and secretarial auditors and the reviews performed by the managementthe Board is of the opinion that the Company's internal financial controls are adequateand effective during the FY 2017.
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Other Statutory Disclosures
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:
a) Details relating to deposits covered under Chapter V of the Act.
b) Issue of equity shares with differential rights as to dividend voting or otherwise.
c) Issue of shares (including sweat equity shares) to employees of the Company underany Scheme save and except ESOP Schemes referred to in this Report.
d) The Wholetime Director of the Company doesn't receive any remuneration or commissionfrom its subsidiary oftheCompanyat Company.
e) No significant Regulators/Courts/Tribunals which impact the going care for concernstatus and Company's operations in future.
YourDirectorstakethisopportunitytothankandacknowledge with gratitude the cooperationand assistance received from Domino's International Dunkin' Donuts International
Government and Regulatory Authorities Business Partners Bankers Members and otherStakeholders. Also the Board places on record its appreciation for the enthusiasticcooperation hard work dedication and commitment of the employees at all levels.
Your Directors would also like to appreciate the confidence and loyalty displayed bythe guests whom the Company always strive to serve better.
For and on behalf of the Board of Directors
|Sd/- ||Sd/- |
|Shyam S. Bhartia ||Hari S. Bhartia |
|Chairman & Director ||Co-Chairman & Director |
|DIN No. 00010484 ||DIN No. 00010499 |
|Place: Noida || |
|Date: May 29 2017 || |