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Lykis Ltd.

BSE: 530689 Sector: Consumer
NSE: N.A. ISIN Code: INE624M01014
BSE LIVE 15:16 | 22 Nov 44.30 2.10
(4.98%)
OPEN

44.30

HIGH

44.30

LOW

43.00

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 44.30
PREVIOUS CLOSE 42.20
VOLUME 87007
52-Week high 63.80
52-Week low 37.30
P/E
Mkt Cap.(Rs cr) 86
Buy Price 44.30
Buy Qty 8682.00
Sell Price 0.00
Sell Qty 0.00
OPEN 44.30
CLOSE 42.20
VOLUME 87007
52-Week high 63.80
52-Week low 37.30
P/E
Mkt Cap.(Rs cr) 86
Buy Price 44.30
Buy Qty 8682.00
Sell Price 0.00
Sell Qty 0.00

Lykis Ltd. (LYKIS) - Director Report

Company director report

To

The Members

Your directors have pleasure in presenting the 32nd Annual Report together with theAudited Statement of Accounts for the financial year ended on 31st March 2016.

1. Financial Performance Summary:

(Rs. in Lakhs)
Particulars For the year ended on 31.03.2016 For the year ended on 31.03.2015 For the year ended on 31.03.2016 For the year ended on 31.03.2015
(Standalone) (Standalone) (Consolidated) (Consolidated)
Income
Revenue from operation 10466.76 16683.57 10693.70 16805.61
Capital Expenditure on tangible assets during the year 219.21 88.41 233.24 129.69
Amount transferred to Reserve - - - -
Profit / (Loss) before Depreciation Interest andTax 476.09 422.46 335.82 288.02
Less: Depreciation 34.27 73.89 40.63 74.28
Profit / (Loss) after Depreciation but before Interest &Tax 441.82 348.57 295.19 213.74
Less: Interest 206.68 171.78 208.02 173.48
Profit / (Loss)after Depreciation and Interest but beforeTax 235.14 176.79 87.17 40.26
Less: Provision ForTaxation - - - -
CurrentTax 51.20 57.00 51.20 57.00
DeferredTax 4.69 (25.90) 4.69 (26.10)
Profit / (Loss)afterTax for the period 179.25 145.69 31.28 9.36
Add/(Less): Share of Loss transferred to Minority Interest - - 2.64 1.37
Profit / (Loss) for the period after adjustment 149.25 145.69 33.92 10.73

2. Overview of Company’s Affairs:

During the year under review your Company witnessed reduction in revenue from Rs.16805.61 lakhs in 2014-15 to Rs. 10693.70 lakhs in 2015-16. The reduction is mainly dueto reduction in exports to African markets reason being unprecedented devaluation of theircurrencies.

The primary factors expected to drive a spurt in FMCG sales are stronger GDP growth andrise in employment. An increase in the rate of availability through distribution expansionis also expected to support sales growth. The overall FMCG market is expected to increaseat a compound annual growth rate (CAGR) of 14.7 per cent during 2012-2020 with the ruralFMCG market anticipated to increase at a CAGR of 17.7 per cent during 2012-2025.

A number of steps taken by the government and the direct transfer of subsidies are alsoexpected to start bearing fruit. The cumulative effect of lower oil and commodity pricesare expected to contribute to significant structural changes in the economy.

Income distribution acts as a crucial barometer for FMCG firms in emerging markets byallowing firms to assess when household incomes reach levels at which discretionaryspending takes off. As more households move into middle-class income bracketsaspirational consumers switch purchases from basic food items to FMCG items. India'sincome distribution is poised to see a significant change over the next decade. Theincrease in absolute incomes and changes in distribution are expected to be key drivers ofgrowth.

Consumer goods companies particularly FMCG companies are upbeat as well. Rural Indiais estimated to account for more than 700 million consumers or 70 per cent of the Indianpopulation and 50 parent of the total FMCG market. This market has immense potentialenticing FMCG companies to take different steps to capture it. The smaller towns andcities of India are expected to play a more significant role in shaping future demandtrends in the FMCG sector. The FMCG segment will contribute increasingly larger shares ofsales for e-commerce companies.

3. Board of Directors and Key Managerial Personnel:

Key Managerial Personnel of the Company:

Pursuant to the provisions of Section 203 of the Act the key managerial personnel ofthe Company are Mr. Pawan Kumar Gupta Chief Executive Officer; Mr. Ankit MaheshwariChief Financial Officer and Mr. Shailesh Bhaskar Company Secretary. There has been nochange in the key managerial personnel during the year.

In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. NadirUmedali Dhrolia (DIN: 03303675)retires by rotation at the forthcoming Annual GeneralMeeting and he being eligible offers himself for re-appointment.

4. Dividend:

Though the Company has reported profit in the financial year 2015-16 your Companyperceives tremendous growth prospects and to capitalize on the opportunities theManagement has not recommended any dividend for the current financial year.

5. Share Capital:

During the year under review 9 68000 Equity warrants @ Rs. 40/- (including premiumof Rs. 30/- per warrant) were issued to Mr. Pawan Kumar Gupta the Non-Promoter CEO of theCompany. Further 968000 equity shares were allotted pursuant to conversion of the saidwarrants by him. The said shares are under lock - in upto 17/01/2017.

6. Transfer to Reserves:

During the period under review the Company has not transferred any amount to reserves.

7. Material Change in Nature of Business:

There has been no material change in the nature of business of the company.

8. Risk Management:

The Board takes responsibility for the overall process of risk management in theorganisation and for ensuring the robust internal controls are implemented to respond tochanges in the business environment. An integrated system of risk management and internalcontrols is deployed taking into account various factors such as the size and nature ofthe inherent risks and the regulatory environment of the business. The business risk ismanaged through cross functional involvement and communication across businesses. Theresults of the risk assessment and residual risks are presented to the senior management.The Audit Committee reviews business risk areas covering operational financial strategicand regulatory risks.

Lykis's strategy for risk management is to ensure that the Company and its employeescontinue to operate a 'go beyond' compliance approach. This creates an environment wherethere is an embedded culture of informed risk acceptance supported by an effectiveframework to create and foster growth.

9. Internal Control Systems and their Adequacy:

The Company has an adequate system of internal controls in place. These controls havebeen designed to provide a reasonable assurance with regard to maintaining of properaccounting controls for ensuring reliability of financial reporting monitoring ofoperations compliances with regulations and protecting assets from unauthorised use orlosses. The Company has continued its efforts to align all its processes and controls withglobal best practices. The company accords greatest importance to the security of itsinformation assets and has the requisite security controls and checks. Adequate storageand back-up system is maintained to ensure security and availability of data at all timesThe internal control is supplemented by an extensive program of internal and externalaudits.

10.Subsidiary Companies Joint Venture and Associate Companies:

a. Lykis Packaging Pvt. Ltd. (Formerly known as Lykis Pharma Pvt. Ltd.):It is asubsidiary of Lykis Limited. The Company is in the process of diversifying intoPlastics/packaging business to facilitate backward integration with Lykis Limitedbusiness. During the year under review the turnover of the Company is Rs. 35.14 lakhs.

b. Lykis Marketing Pvt. Ltd.: It is a wholly owned subsidiary of Lykis Limited.In a very short period the Company has set up a marketing network in 10 States. TheCompany is focused on domestic marketing of Tea and FMCG products and has achieved aturnover of 5.89 Crore during the year under review.

c. Lykis Confectioners Pvt. Ltd.: It is an Associate Company of Lykis Limited.It is involved in the manufacturing of Confectionery products.

d. Lykis Biscuits Pvt. Ltd Lykis Agritech Pvt. Ltd Lykis (UK) Limited& LykisSoaps Pvt. Ltd.: During the under review the Company incorporated Lykis Soaps Pvt.Ltd to expand & diversify business of the Company along with other existing companiesin future in India as well as overseas.

11. Deposits:

During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter V – Acceptance of Deposits by Companies of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

12. Corporate Social Responsibility:

Lykis Limited is committed to empower the local communities in its area of operationand support them in their path to sustainable and inclusive growth. This commitment isfundamental to the Company's long term success. Lykis Limited is focused on creatingshared value and making a difference through our Corporate Social Responsibilityinitiatives.

i) Being in the FMCG Sector the company is extremely environmental friendly andstrives to contribute towards preserving nature and our environment.

II) The Company provides several local employment opportunities and contributes towardsimprovement in standard of living.

III) Immense care is taken to ensure that the necessities of all our stakeholders aremet. We treasure our employees and ensure their happiness in several ways.

IV) The employees are provided with a healthy working environment free lunch andproper sanitation and water supply. Considerable amount has been invested intoinfrastructure to ensure health and safety of our employees

13. Corporate Governance:

Securities Exchange Board of India (SEBI) has prescribed certain Corporate GovernanceStandards vide SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.Your Directors re-affirm their commitment to these Standards and a detailed report onCorporate Governance together with the Auditor's Certificate on its Compliance is annexedhereto.

14. Human Resources:

Your Company considers its Human Resources as the key to achieve its objectives.Keeping this in view your Company takes utmost care to attract and retain qualityemployees. The employees are sufficiently empowered and an enthusiastic and healthy workenvironment propels them to achieve higher levels of performance. The unflinchingcommitment of the employees is the driving force behind the Company's vision. Your Companyappreciates the spirit of its dedicated employees.

15. Directors' Responsibility Statement:

To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:

a. in the preparation of the annual financial statements for the year ended March 312016 the applicable

Accounting Standards had been followed along with proper explanation relating tomaterial departures.

b. for the financial year ended March 31 2016 such accounting policies as mentionedin the Notes to the financial statements have been applied consistently and judgements andestimates that are reasonable and prudent have been made so as to give a true and fairview of the state of affairs of the Company and of the Profit and Loss of the Company forthe year ended March 31 2016.

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

d. the annual financial statements have been prepared on a going concern basis.

e. that proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.

16. Management Discussion & Analysis:

In terms of clause (e) sub regulation (2) of Regulation 34 of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Management Discussion & Analysisforms part of the Annual Report.

17. Particulars of Employees:

As required under the provisions of the Companies Act 2013 and Rule 5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thestatement of particulars of the employees concerned forms part of the Board's Report.Since the company does not fall under the prescribed limit of the aforesaid provisions.Therefore this requirement is not applicable to the Company.

18. Conservation Of Energy Technology and Foreign Exchange Outgo:

The particulars of conservation of energy technology absorption and foreign exchangeearnings and outgo in accordance with the provisions of Rule 8 of the Companies (Accounts)Rules 2014 is annexed herewith and forms part of this report. (Annexure I).

19. Auditors And Auditors' Reports:

Statutory Audit:

Your Company's Auditors M/s. Sanjay P. Agarwal & Associates Chartered Accountantswere appointed as the Statutory Auditors at the 30th Annual General Meeting for a term of5 years. Their appointment is to be ratified by the Shareholders under Section 139 of theCompanies Act 2013 at the ensuing Annual General Meeting. The Statutory Auditor's Reportdoes not contain any qualification reservation or adverse remark. The Auditors' Reportand the Notes on Account being self-explanatory are not dealt with separately.

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Bijay Agarwal Practicing Company Secretary as its Secretarial Auditor toundertake the Secretarial Audit for the financial year 2015-16. The Secretarial AuditReport certified by our Secretarial Auditors in the specified form MR-3 is annexedherewith and forms part of this report. (Annexure-II)

20. Particulars of Loans Guarantees or Investments under Section 186 of the CompaniesAct 2013:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

21. Extract of Annual Return:

The details of the extract of the Annual Return in form MGT9 is annexed herewith andforms part of this report. (Annexure III)

22. Declaration By Independent Director(s):

Pursuant to the provisions of Section 149 of the Act Mr. Rajendra Manilal Shah and Ms.Jyoti Budhia were appointed as Independent Directors at the 31st Annual General Meetingheld on 30th September 2015 while Mr. Mayank Jhunjhunwala was appointed as IndependentDirector in 30th Annual General Meeting held on 30th September 2014. They have submitteddeclarations that each of them meets the criteria of Independence as provided in Section149(6) and there has been no change in the circumstances which may affect their status asIndependent Director during the year.

23. Qualification or Reservation or Adverse Remark in Statutory Audit Report:

There is no such qualification or reservation or adverse remark reported by theStatutory Auditor of the company.

24. Training & Familiarization Programme Of Independent Directors:

A Director upon appointment is formally inducted to the Board. In order tofamiliarise the Independent Directors about the various business drivers they are updatedthrough presentations at Board Meetings about the Financials of the Company and newproduct launches.

They are also provided booklets about the business and operations of the Company.

25. Board Evaluation:

The Board has carried out an annual evaluation of its own performance as well as theworking of its Committees. The Board lay down the criteria for the performance evaluation.The contribution and impact of individual Directors were reviewed through a peerevaluation on parameters such as level of engagement and participation flow ofinformation independence of judgment conflicts resolution and their contribution inenhancing the Board's overall effectiveness. A feedback cum assessment of individualdirectors the board as a whole and its committees was conducted. The feedback obtainedfrom the interventions was discussed in detail and where required independent andcollective action points for improvement put in place.

26. Related Party Transaction Policy:

All transactions entered into with related parties as defined under the Companies Act2013 and Rules 23 of SEBI (LODR) / Listing Agreement during the year under review were inthe ordinary course of business and on an arms' length basis and did not attract theprovisions of Section 188 of the Companies Act 2013. With regard to transactions withrelated parties prior approval of the Audit Committee was obtained wherever required.

During the year under review the Company had not entered into any contract/arrangement / transactions with related parties which could be considered as material.

The particulars of contracts or arrangements referred to in section 188(1) of theCompanies Act 2013 with related parties and as mentioned in form AOC-2 of the Rulesprescribed under Chapter IX under the Companies Act 2013 is annexed herewith and formspart of this report. (Annexure IV)

27. Vigil Mechanism / Whistle Blower Policy:

In Compliance with provisions of Section 177(9) of the Companies Act 2013 Rule 22 ofSEBI (CODR) Regulation 2015 your Company has established a Vigil Mechanism/ WhistleBlower Policy to enable stakeholders including Directors and employees to report unethicalbehavior actual or suspected fraud or violation of the Company's Code of Conduct. ThePolicy provides adequate safeguards against victimization of Director(s)/ employee(s) anddirect access to the Chairman of the Audit Committee in exceptional cases. The ProtectedDisclosures if any reported under this Policy will be appropriately and expeditiouslyinvestigated by the Chairman. Your Company hereby affirms that no Director/ employee hasbeen denied access to the Chairman of the Audit Committee and that no complaints werereceived during the year. The Whistle Blower Policy has been disclosed on the Company'swebsite and circulated to all the Directors / employees.

28. Prevention of Sexual Harassment of Women at Workplace:

The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on prevention prohibition and Redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and Redressalof complaints of sexual harassment at workplace. The Company has not received anycomplaint on sexual harassment during the financial year 2015-16.

29. Other Policies:

Your Company had adopted various other policies such as Policy for Document RetentionPolicy on Material Subsidiaries etc. as per the statutory requirements of Companies Act2013 and various other applicable laws rules and regulations. All the policies aredisclosed on the company’s Website at www.lykisgroup.com.

30. Significant and Material Orders Passed by the Regulators:

Trading of shares of the Company was suspended from 31st March 2016 by BSE Limited assurveillance measures vide its notice no. 20160328-15 Dated: 28th March 2016. Howeverthe said suspension was revoked by them w.e.f 18th April 2016 by its notice no.20160413-37 dated: 13th April 2016 after submission of required documents by the companywith the exchange.

Acknowledgement:

We thank our Vendors Bankers Statutory Authorities and other Institutions for theircontinued support during the year. We place on record our appreciation of the contributionmade by our employees at all levels. Our consistent growth was made possible by their hardwork solidarity co-operation and support.

We also wish to express our gratitude to the Governments of various countries where wehave our operations.

For and on behalf of the Board
Place: Kolkata VIJAY KISHANLAL KEDIA
Dated: 12th August 2016 Chairman
DIN: 00230480